Jurisdiction(s):
United Kingdom

Cooke v HMRC: UK FTT applies Lobler, assuming rectification to secure entrepreneurs’ relief after spreadsheet error left holding below 5%; ‘would order’ threshold met despite minimal non-fiscal effects

Published on: 10 July 2024

Published by a LexisNexis Private Client expert

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Article summary

Cooke v Revenue and Customs Commissioners [2024] UKFTT 272 (TC) What are the practical implications of this case?

Cooke (and the earlier authority it followed, Lobler [2015] UKUT 152) is very good news for clients (and advisers) whose paperwork fails to capture their commercial intention because of a mistake. It illustrates the FTT’s readiness to employ, in an indirect way, the equitable remedy of rectification to amend documents to favourable effect, even where the principal outcome is a tax saving. The FTT lacks the jurisdiction to order rectification. Nevertheless, Cooke exemplifies the principle that, if the Tribunal is satisfied that, were appropriate proceedings issued in the High Court, the High Court would grant rectification, then the Tribunal ought to proceed as though such rectification had been granted. The threshold for concluding that the High Court ‘would order’ rectification is a demanding one. Cooke also offers guidance on when recourse to equity by way of rectification is not excluded because of its consequences for third parties...

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