Jurisdiction(s):
United Kingdom

UKUT: Overseas indemnity release not a UK remittance; s809L ITA 2007 purposively construed, not anti-avoidance; ‘service’ given ordinary meaning (HMRC v Sehgal & Mehan)

Published on: 09 July 2024

Published by a LexisNexis Private Client expert

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Article summary

The Commissioners for HM Revenue and Customs v Sehgal and Mehan [2024] UKUT 00074 (TCC))

What are the practical implications of this case?

The headline issue here is the method for construing ITA 2007, s 809L. The Upper Tribunal acknowledged that the section was brought in to plug gaps, defects and oddities in the earlier remittance basis regime. Yet it declined HMRC’s argument that this character made it an anti-avoidance measure warranting a more expansive reading than usual. Instead, s 809L falls to be read like any other statutory text: purposively, to decide whether, taking a realistic view, Parliament meant it to catch the transactions in point. On that footing, the pivotal expression, ‘service’, must bear its ordinary sense, informed by its contextual setting. It should not be stretched beyond its natural scope or given a contrived gloss. Had Parliament wanted a broader compass, it would have said so by defining the term. Accordingly, the court treated ordinary language as the starting and ending point, shaped by context, rather than importing an expanded, tax-driven gloss. Precision in drafting was decisive here.

What was the background?

The taxpayers were resident in the UK but not UK-domiciled...

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