Shining a light on recent tax cases

Tony Jenkins, member of the LSCA Taxation Committee, brings some recent high profile and interesting tax cases to the attention of London’s chartered accountants.

December 2020

 This article seeks to highlight some recent tax cases from the Courts worthy of attention - full details of each case can be found on relevant databases. Future articles will continue this objective.

• First, the case of Phillips & Anor [2020] TC 07859 relates to principal private residence relief (PPRR) given on a larger permitted area.

The First-tier Tribunal upheld the taxpayers’ appeal, concluding that full PPRR was available because an area larger than half a hectare was required for the reasonable enjoyment of their dwelling house.

HMRC usually seek to adopt a very restrictive view of the ‘required’ test, and in most recent decided cases the taxpayer has been unsuccessful. It remains to be seen whether HMRC will appeal the decision.

• Second, the case of HMRC v Sippchoice Limited [2020] UKUT 149 (TCC) relates to the transfer of assets into a SIPP.

The Upper Tribunal allowed an appeal by HMRC and denied relief for in-specie pension contributions, overturning the decision of the FTT which had previously concluded that a transfer of shares could be treated as ‘contributions paid’ and thus were relievable contributions for income tax purposes.

This is an unusual case with potentially wide-ranging ramifications for the pensions industry. A long-standing HMRC position has been overturned as a result of HMRC contending that their own guidance was wrong, and this seemingly puts an end to any future in-specie pension contributions.

• The last case of Allan Firth Webster [2020] EWHC 2275 (Ch) focuses on charitable donations and an incorrect carry back figure.

The High Court would not allow the taxpayer to rectify an error on his return, where he carelessly entered an £800,000 Gift Aid donation as half of that amount. The legislation does not allow carry back figures to be amended after the return is submitted, and also does not permit partial carry back claims, HMRC denied entirely the carry back Gift Aid claim as the amount of the donation and the original amount entered on the tax return were not the same figure.

Tony Jenkins' next article will consider another three specific cases.