Legal News

Asset House Piccadilly Limited v HMRC [2023] UKFTT 279 ( TC) HMRC had served information notices in connection with enquiries into certain aspects of the taxpayer’s corporation tax returns, and additionally on the basis of HMRC’s suspicion that the company acted as an ‘enabler’ of arrangements said to be abusive. The company brought strike-out applications in two separate appeals against those notices. The HMRC case-handlers responsible for the appeals were not admitted solicitors, nor were they under a solicitor’s supervision at any material time. The strike-out bids contended that, as a result, they were effectively contravening LSA 2007, s 14(1) by undertaking a reserved legal activity, namely conducting litigation before the Tribunal in these appeals. In substance, the strike-out requests sought to exclude HMRC from the proceedings altogether. The FTT concluded that HMRC officers are part of HMRC......

Good v Revenue and Customs Commissioners [2023] EWCA Civ 114 What are the practical implications of this case? This decision offers clear, practical direction on how the phrase ‘entitled to’ should be understood across income tax provisions, and on the purposive reading of those rules, making it of broad relevance to all tax advisers. It affirms that the authorities recognise a wider principle: subject to the wording of the statute and the context of the payments, an individual can be charged to tax on sums paid to another if that individual derives a benefit from those sums. That conclusion is unaffected by an irrevocable assignment of the payments. It did not matter that the parties never intended the rights to return to Mr Good; it was enough that, as a matter of contract, they could have done so. The case also sheds further light on...

How to witness and attest a deed under the Law of Property ( Miscellaneous Provisions) Act 1989 ( Euro Securities & Finance v Barrett) Euro Securities & Finance Ltd v Barrett and others [2023] EWHC 51 ( Ch) What are the practical implications of this case? The safest route to prevent disputes over a deed’s validity is: all principal signatories execute at the same time and in the same location; any witness should be a non-party to the deed and observe the signatures physically, in person; and each witness should attest, separately, every signature they observed, doing so straightaway while remaining in the signatories’ presence. Each of these points ought to be documented in writing. That said, the judge in Euro Securities considered that the LP( MP) A 1989 may afford parties greater latitude. Although much of the discussion was obiter, in essence the judge...

Isle of Wight NHS Trust and others v HMRC [2023] UKFTT 23 The dispute originates in correspondence about the proper VAT treatment of supplies of locum doctors to NHS hospitals. Acting for multiple NHS Trusts, the appellants’ representative (a VAT adviser) sent HMRC a technical paper on the VAT position for locum doctors. The adviser explained that formal claims would follow within weeks, and included illustrative figures to indicate the likely scale. That correspondence set the context for the dispute, as the adviser’s letter trailed the intended claims while providing worked examples to illustrate quantum. The submission contested HMRC’s stated position and contended that an earlier tribunal decision on the same issue had been wrongly reached. HMRC replied at length, upholding its policy as correct. After receiving HMRC’s detailed response, which affirmed the existing position, the adviser treated that reply as a...

Harris v HMRC [2022] UKFTT 447 ( TC) The appeal related to a tax charge of around £900,000 set out in a partial closure notice issued by HMRC. The appeal was placed in the complex category, and the taxpayer did not opt out of the costs regime. The FTT characterised the litigation as ‘ill‑tempered’, but in due course HMRC informed the FTT that they would no longer contest the appeal, whereupon the FTT allowed it. The taxpayer subsequently sought costs of more than £350,000, to be assessed on the indemnity basis. HMRC at first applied to have that application struck out on procedural grounds, but the FTT refused this,......

Withers v HMRC [2022] UKFTT 433 ( TC) The landholding comprised a dwelling with a self-contained annexe and gardens and grounds of circa 10 acres, together with a further circa 20 acres. Part of the additional land was used for grazing, and part was entered into a rewilding scheme. The grazing area had been used in that way continuously for 20 years, although a formal written grazing agreement—which did curtail the taxpayer’s use of the land in certain respects—was only adopted in 2019. Pursuant to that agreement, a local farmer grazed his sheep on the land in return for a nominal rent and the farmer’s ongoing upkeep of the land. The rewilding land was subject to stringent conditions limiting the taxpayer’s access and use, and imposed duties on the taxpayer to control pests and to refrain from grazing livestock on the specified land. In both...

HMRC has revised IHT411, a form used alongside IHT400 to provide information on shares or stock held by the deceased. It now also features a hyperlink within the section......

What is a captive insurance company? A captive insurer is a fully owned subsidiary set up to manage and mitigate the risks of its parent and related entities. When the parent cannot secure appropriate cover from the traditional market for certain risks Premiums paid into the captive can generate savings for the parent or related parties Ability to place cover with reinsurers that the parent cannot access directly Addresses specific risks not available in the wider insurance market Funds the deductibles on policies purchased by the parent Investment income available to offset losses Improved control over claims Cover tailored to your needs Reduced reliance on commercial insurance Stabilisation of pricing Key takeaways A captive insurer is a wholly owned subsidiary that mitigates risk for its parent and related entities Benefits can include lower...

Re estate of Ramus (deceased); Ramus v Holt (as executor and beneficiary of the estate of Christopher Stewart Ramus) and others [2022] EWHC 2309 ( Ch) What are the practical implications of this case? As with many I( PFD) A 1975 claims, the facts are regrettable; yet a careful, lengthy judgment distils the core lessons and sharply reinforces the fundamentals. Issuing proceedings in haste is ill-advised; without cogent evidence, a claim cannot succeed. Contentious probate practitioners are reminded that every I( PFD) A 1975 application is fact-specific and must be assessed against its own circumstances ( Cowan v Foreman [2019] EWCA Civ 1336). Spousal claims also engage the special factors in s 3(2) of the I( PFD) A 1975. The Duxbury calculation should not be applied by rote; it is a helpful guide. The appropriate method is to start with Duxbury, attribute proper weight to the...

Edward Cumming Bruce v Revenue and Customs [2022] UKUT 233 ( TCC) Following the Court of Appeal’s decision in Mansworth v Jelley [2002] EWCA Civ 1829, together with an associated HMRC press release in January 2003, the taxpayer sought to claim capital losses by making in-time amendments to previously submitted tax returns. He wrote to HMRC enclosing revised computations of losses realised on the disposal of shares acquired under an adjustable share option scheme, together with detailed changes to the capital gains tax ( CGT) calculation pages in the relevant returns. HMRC opened enquiries into the relevant returns pursuant to TMA 1970, s 9A, and later closed those enquiries on the footing that the asserted losses were not allowable. The question on appeal focused on whether the taxpayer’s notifications of capital losses were free-standing claims or whether they formed part of his tax...

HMRC has now revised form IHT409, employed alongside form IHT400 when the deceased had received or had...

Altrad Services Ltd and Robert Wiseman and Sons Ltd v HMRC [2022] UKUT 185 ( TCC) The taxpayers (referred to as Cape and Wiseman before the FTT) implemented schemes intended to ‘step up’ the capital allowances available to them on assets they already held. Put simply, they transferred the assets to a bank, the bank leased them back to the taxpayers for a brief period of three or four weeks, and afterwards the bank transferred the assets back to the taxpayers by way of a sale. Relying on a quirk in the statutory rules (later rectified by the Finance Act 2011), the taxpayers argued that, for capital allowances purposes, they were not required to recognise any disposal value on that first sale of the assets, but......

Beard v HMRC [2022] UKFTT 129 ( TC) This appeal addresses the proper UK tax treatment of distributions made by a Jersey company from its share premium account. The company was a publicly listed limited company incorporated in Jersey, domiciled in Switzerland, and with its head office also in Switzerland. It was not resident in the UK for tax purposes. HMRC issued a closure notice assessing the appellant, Mr Beard, to income tax on a series of such distributions he received from the company over a number of years. Mr Beard appealed, arguing that the payments were capital in nature and therefore fell outside the UK charge to income tax. The FTT had to determine whether the distributions were to be treated as dividends for the purposes of section 402 of the Income Tax ( Trading and ......

HMRC v AML Tax ( UK) Ltd UKUT 81 ( TC) The company formed part of a loosely associated Isle of Man group and operated in connection with tax avoidance arrangements used by UK contractors and sub-contractors. The exact scope of what it did was uncertain, but it encompassed promoting the group’s avoidance offerings and devising and delivering at least one arrangement. HMRC opened enquiries into the company’s 2014 and 2015 returns and, in February 2018, served an information notice. The company provided no compliance at all until December 2019, and some of the requested material was still outstanding until August 2021. After issuing fixed and daily penalties, HMRC applied to the UT for a penalty under FA 2008, Sch 36, para 50......

Hargreaves v HMRC [2022] UKUT 34 ( TCC) Although the taxpayer, Mr Hargreaves, had persuaded the FTT to set aside the discovery assessments by relying on staleness, the Supreme Court’s ruling in Tooth [2021] UKSC 17 effectively removed staleness as a viable concept. In consequence, HMRC’s appeal on that ground was bound to succeed, and the taxpayer did not seek to argue otherwise. As a safeguard, in case it were mistaken on staleness, the FTT also examined further points and stated it would have found for HMRC on those too. Mr Hargreaves appealed those alternative conclusions to the UT, but that appeal did not succeed. The dispute arose because Mr Hargreaves filed a self-assessment tax return on the footing that he was not resident in the UK for the year concerned. HMRC took the view that this was wrong and raised an...

Hyman and another v HMRC [2022] EWCA Civ 185 Under section 116 of the Finance Act 2003 ( FA 2003), any land which is, or comprises part of, the gardens and grounds of a dwelling is regarded as being residential property and is charged to SDLT at the residential rates. The taxpayers were seeking to argue that land acquired with a dwelling did not constitute part of that property’s garden or grounds, so that buying the dwelling together with the land should be classed as mixed-use property (and benefit from the lower non-residential SDLT rates). They further maintained that land can qualify as garden or grounds of a dwelling only where the land is required for the reasonable enjoyment of the......

X London Borough Council v MR (by his litigation friend, the Official Solicitor) and others [2022] EWCOP 1 What are the practical implications of this case? While best interests determinations are always grounded in their specific facts, this decision will interest Court of Protection practitioners because it models a comparative best interests evaluation of end-of-life residence and care options. The judgment underscores that, in welfare proceedings, the court and the parties must look beyond mere preservation or extension of life and physical health, and give proper weight to a person’s quality of life. Here, the court accepted that relocating to a different care home carried ‘a high risk of adverse events including a higher risk of mortality’, especially in the initial months after any move. It also acknowledged that MR’s advanced dementia significantly curtailed his capacity to comprehend religious or cultural customs or...

Lehman Brothers Holdings Scottish LP 3 v Lehman Brothers Holdings plc (in administration) and others; Joint liquidators of LB GP No 1 Ltd (in liquidation) and another v Joint administrators of Lehman Brothers Holdings plc (in administration) and another [2021] EWCA Civ 1523 What are the practical implications of this case? The effect of the court’s adjustment to the rule against double proof is that a surety who makes a part payment under a settlement and, in doing so: waives its right of indemnity against the insolvent principal debtor; and obtains an assignment from the creditor of the principal debtor’s liability, will be confined to proving for the remaining unpaid amount. In its capacity as assignee, it cannot rely on the general double proof rule that allows an unpaid creditor to prove in full without setting off any part payment made by a surety. Parties should...

Ladson Preston Ltd and AKA Developments Greenfield Ltd v HMRC [2021] UKFTT 251 ( TC) Both Ladson Preston Ltd ( Ladson) and AKA Developments Greenfield Ltd ( AKA) purchased property benefiting from planning permission for multiple residential units. As at the effective date of each transaction, no dwelling had yet been erected. The taxpayers contended that the presence of that consent was enough to satisfy the statutory wording of paragraph 7(2)(b) of Schedule 6B to the Finance Act 2003 ( FA 2003). Under that provision, a building qualifies as a dwelling for the purposes of multiple dwellings relief ( MDR) if it is in the course of construction or is being adapted for such occupation. AKA had additionally carried out early-stage site works and argued that those operations—specifically the drilling of boreholes—meant the dwellings were already in the process of being built. The cases...

Rock Ferry Waterfront Trust v Pennistone Holdings Ltd [2021] EWCA Civ 1029 What are the practical implications of this case? The circumstances of this case may seem, to some at least, somewhat unusual. Yet they are the kind of facts that are liable to arise in practice more often than might first appear. From the judgment two key principles can be drawn: firstly, where a company not incorporated under the laws of England and Wales is dissolved at a time when it owns property situated in England and Wales, section 1012 of the Companies Act 2006 (the bona vacantia provisions) does not apply. Nonetheless, the company’s incorporation in another jurisdiction does not prevent English law from governing what then happens to the land. Under English law, the land escheats to the Crown and the freehold previously vested in the dissolved company is...