In Joost Lobler v HMRC [2015] UKUT 152 (26 March 2015), the UT allowed the taxpayer’s appeal on the ground of rectification.
The FTT had found against Mr Lobler with ‘heavy hearts’ as he was faced with an effective tax rate of 779%. Mr Lobler, a Dutch national, had moved to England. He had sold his home and invested the proceeds (as well as borrowings) in Zurich Life life insurance policies. He had subsequently made several withdrawals from the policies. Under ITTOIA 2005 s 507, each withdrawal had produced a deemed gain.
The UT noted that the mistake was unilateral, made by Mr Lobler alone. Zurich had simply followed Mr Lobler’s instructions and so Zurich’s intention was irrelevant. The UT added that Pitt v Holt [2013] UKSC 26 was authority for the proposition that a mistake as to the tax consequences of a transaction may be sufficiently serious to warrant rectification.
Additionally, even if Mr Lobler had been careless in not seeking advice when completing the withdrawal form, this carelessness did not deprive him of the remedy of rectification.
The UT found, however, that Mr Lobler’s human rights (under the European Convention on Human Rights article 1 Protocol 1) had not been breached. The relevant provision does not allow for arbitrary interferences, as it is highly prescriptive.
Finally, the UT held that the issue of whether HMRC had acted unlawfully in refusing to amend Mr Lobler’s return was a question for judicial review, not for an appeal.
Why it matters: Several cases involving taxpayers in similar circumstances had been stayed pending the outcome of this appeal. The CIOT intends to make formal submissions to HMRC and the Treasury to obtain a change in the law.
Correction: This report has been amended because the taxpayer was advised and represented by barrister Michael Firth (Gray's Inn Tax Chambers), not the CIOT as was previously stated. We understand that the CIOT was asked to make submissions on an alternative way in which HRA 1998 s 3 could give a relief. That submission was rejected.
In Joost Lobler v HMRC [2015] UKUT 152 (26 March 2015), the UT allowed the taxpayer’s appeal on the ground of rectification.
The FTT had found against Mr Lobler with ‘heavy hearts’ as he was faced with an effective tax rate of 779%. Mr Lobler, a Dutch national, had moved to England. He had sold his home and invested the proceeds (as well as borrowings) in Zurich Life life insurance policies. He had subsequently made several withdrawals from the policies. Under ITTOIA 2005 s 507, each withdrawal had produced a deemed gain.
The UT noted that the mistake was unilateral, made by Mr Lobler alone. Zurich had simply followed Mr Lobler’s instructions and so Zurich’s intention was irrelevant. The UT added that Pitt v Holt [2013] UKSC 26 was authority for the proposition that a mistake as to the tax consequences of a transaction may be sufficiently serious to warrant rectification.
Additionally, even if Mr Lobler had been careless in not seeking advice when completing the withdrawal form, this carelessness did not deprive him of the remedy of rectification.
The UT found, however, that Mr Lobler’s human rights (under the European Convention on Human Rights article 1 Protocol 1) had not been breached. The relevant provision does not allow for arbitrary interferences, as it is highly prescriptive.
Finally, the UT held that the issue of whether HMRC had acted unlawfully in refusing to amend Mr Lobler’s return was a question for judicial review, not for an appeal.
Why it matters: Several cases involving taxpayers in similar circumstances had been stayed pending the outcome of this appeal. The CIOT intends to make formal submissions to HMRC and the Treasury to obtain a change in the law.
Correction: This report has been amended because the taxpayer was advised and represented by barrister Michael Firth (Gray's Inn Tax Chambers), not the CIOT as was previously stated. We understand that the CIOT was asked to make submissions on an alternative way in which HRA 1998 s 3 could give a relief. That submission was rejected.
