UBS and Deutsche Bank may have to pay tens of millions of pounds to HMRC after the supreme court ruled that bonus schemes operated by the investment banks are not exempt from tax.

The judgment, which covers bonuses paid out as far back as 2004, is strongly critical of the banks’ sustained attempts to escape payments due to HMRC.

“In our society, a great deal of intellectual effort is devoted to tax avoidance,” said Lord Reed, delivering the ruling. They are “sophisticated attempts of the Houdini taxpayer to escape from the manacles of tax”.

The UBS and Deutsche Bank schemes, he added, were designed to “to avoid the payment of income tax on bankers’ bonuses”. The firms tried to exploit tax exemptions on restricted securities by awarding staff bonuses comprised of shares in offshore companies set up especially for rewarding employees.

Reed said the UBS scheme “was completely arbitrary. It had no business or commercial rationale beyond tax avoidance.”

Deutsche Bank’s “dark blue” share scheme, the judge said, was “equally artificial”. He added: “It had no business or commercial purpose, and existed solely to bring the securities within the scope of [tax exemption].” Both schemes avoided tax and national insurance liabilities.

Commenting on the judgment, Justin McGilloway, a partner and head of pensions and employee benefits at Wedlake Bell law firm, said: “The judgment is potentially a reflection of the current economic climate and a win for HMRC is not a surprise.

“It’s very bad news for the banks involved – they will need to pay the tax on employee bonuses which were delivered over a decade ago. This will run to tens of millions, not including the legal fees incurred in defending the scheme in the highest court in the land.

“This success could open the door for HMRC to challenge other so-called tax avoidance schemes which were perfectly legal when they were originally implemented.”

A spokesman for UBS said: “This matter concerns a disagreement over the interpretation of highly technical tax legislation and dates back to a one-off compensation plan for 2003.”

The bank said it was “disappointed” with the outcome, but was grateful to the supreme court for its “careful consideration of the issues”.

A Deutsche Bank spokesman said: “We note the decision and can confirm that all tax and national insurance due as a result have already been paid.”