SDLT, whether property suitable as a dwelling:Henderson Acquisitions Ltd v HMRC[2023] UKFTT 739 (TC) (31 August 2023) is another case on whether a property is suitable for use as a dwelling. The FTT dismissed the appeal against HMRC's refusal of a claim for a refund of SDLT because the property was, at the time of purchase, suitable for use as a dwelling and did not qualify for the non-residential rate of SDLT. Although parts of the property were considered to be unsafe (joists were unsound and ceilings had fallen down), this comprised less than half of the floor area of the property and the property as a whole was still structurally sound and contained all the required facilities for living. It is notable for the very clear warning that the FTT gave at the beginning of its decision: ‘We consider it important that there be a further published decision on this issue in order to protect taxpayers such as the Appellant from being persuaded to make unmeritorious claims for repayment of SDLT contrary to the purpose and intention of the statutory provisions’. Whether that warning will have any impact on the number of such claims remains to be seen. Read the decision.
Litigation disclosure:InA Trees v HMRC [2023] UKFTT 729 (TC) (25 August 2023), HMRC alleged that the director’s company was involved with transactions connected to the fraudulent evasion of VAT and that the director knew, or should have known, that the transactions were so connected. In this application for additional disclosure the director sought disclosure by HMRC of every document it held which mentioned his name or that of his company. The FTT did not accept that request. It said that requiring HMRC to do that would be disproportionate as HMRC had already met its legal disclosure requirements, including documents which were adverse to its own case. This is a highly specialist area but litigators will want to read the judge’s characteristically clear analysis of the relevant legal tests. Read the decision.
Finality in tax:In HMRC v J Walsh[2023] EWHC 2213 (Ch) (13 September 2023), the taxpayer had been assessed to VAT, income tax and CGT and associated penalties back in 2012 in respect of various property transactions but had not appealed the assessments until some four years later. The High Court (HC) did not give permission for the late appeal to be admitted and (with some small adjustments conceded by HMRC) the assessments became final and the tax charged became due. In this hearing HMRC sought an order from the courts that certain properties owned by the taxpayer should be sold in order to meet the outstanding tax liability. The taxpayer attempted to dispute the liability, saying that he had received advice that the assessments were considerably in excess of the true amount of tax which arose from the transactions. The HC was clear that the taxpayer had no right to do this: any challenge should have been made through the normal appeals mechanism. Once the tribunal had refused to admit the late appeals that was the end of the matter and the law was clear: the taxpayer could not use enforcement proceedings as an alternative way of disputing liability. There is nothing particularly new in this decision, but it is a useful reminder that failure to appeal in time closes off the option to dispute assessments at the enforcement stage. Read the decision.
LLPs and salaried members rules: In HMRC v Bluecrest Capital Management (UK) LLP [2023] UKUT 232 (TCC) (18 September 2023), the UT dismissed both HMRC's appeal and the respondent's cross-appeal against the FTT's decision that (1) all members of the LLP met Condition A of the salaried members rules as their remuneration was not variable, and (2) only certain individual portfolio managers and desk heads had ‘significant influence’ over the affairs of the LLP, with the result that the other members met Condition B of the salaried members rules. HMRC had appealed on the basis that no members had significant influence over the affairs of the LLP, such that Condition B was met by all members; the respondent cross-appealed on the ground that Condition A was not met by any of its members. The UT rejected both submissions, holding that the FTT had made findings of fact that it was perfectly entitled to make and that there was no error of law in its approach to and construction of the legislation, or in its application of the legislation to the facts of the present case, as found by the FTT. Read the decision.
SDLT, whether property suitable as a dwelling:Henderson Acquisitions Ltd v HMRC[2023] UKFTT 739 (TC) (31 August 2023) is another case on whether a property is suitable for use as a dwelling. The FTT dismissed the appeal against HMRC's refusal of a claim for a refund of SDLT because the property was, at the time of purchase, suitable for use as a dwelling and did not qualify for the non-residential rate of SDLT. Although parts of the property were considered to be unsafe (joists were unsound and ceilings had fallen down), this comprised less than half of the floor area of the property and the property as a whole was still structurally sound and contained all the required facilities for living. It is notable for the very clear warning that the FTT gave at the beginning of its decision: ‘We consider it important that there be a further published decision on this issue in order to protect taxpayers such as the Appellant from being persuaded to make unmeritorious claims for repayment of SDLT contrary to the purpose and intention of the statutory provisions’. Whether that warning will have any impact on the number of such claims remains to be seen. Read the decision.
Litigation disclosure:InA Trees v HMRC [2023] UKFTT 729 (TC) (25 August 2023), HMRC alleged that the director’s company was involved with transactions connected to the fraudulent evasion of VAT and that the director knew, or should have known, that the transactions were so connected. In this application for additional disclosure the director sought disclosure by HMRC of every document it held which mentioned his name or that of his company. The FTT did not accept that request. It said that requiring HMRC to do that would be disproportionate as HMRC had already met its legal disclosure requirements, including documents which were adverse to its own case. This is a highly specialist area but litigators will want to read the judge’s characteristically clear analysis of the relevant legal tests. Read the decision.
Finality in tax:In HMRC v J Walsh[2023] EWHC 2213 (Ch) (13 September 2023), the taxpayer had been assessed to VAT, income tax and CGT and associated penalties back in 2012 in respect of various property transactions but had not appealed the assessments until some four years later. The High Court (HC) did not give permission for the late appeal to be admitted and (with some small adjustments conceded by HMRC) the assessments became final and the tax charged became due. In this hearing HMRC sought an order from the courts that certain properties owned by the taxpayer should be sold in order to meet the outstanding tax liability. The taxpayer attempted to dispute the liability, saying that he had received advice that the assessments were considerably in excess of the true amount of tax which arose from the transactions. The HC was clear that the taxpayer had no right to do this: any challenge should have been made through the normal appeals mechanism. Once the tribunal had refused to admit the late appeals that was the end of the matter and the law was clear: the taxpayer could not use enforcement proceedings as an alternative way of disputing liability. There is nothing particularly new in this decision, but it is a useful reminder that failure to appeal in time closes off the option to dispute assessments at the enforcement stage. Read the decision.
LLPs and salaried members rules: In HMRC v Bluecrest Capital Management (UK) LLP [2023] UKUT 232 (TCC) (18 September 2023), the UT dismissed both HMRC's appeal and the respondent's cross-appeal against the FTT's decision that (1) all members of the LLP met Condition A of the salaried members rules as their remuneration was not variable, and (2) only certain individual portfolio managers and desk heads had ‘significant influence’ over the affairs of the LLP, with the result that the other members met Condition B of the salaried members rules. HMRC had appealed on the basis that no members had significant influence over the affairs of the LLP, such that Condition B was met by all members; the respondent cross-appealed on the ground that Condition A was not met by any of its members. The UT rejected both submissions, holding that the FTT had made findings of fact that it was perfectly entitled to make and that there was no error of law in its approach to and construction of the legislation, or in its application of the legislation to the facts of the present case, as found by the FTT. Read the decision.
