Recent tax cases for consideration

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. Full details of each case are available on the relevant databases.

February 2021

First, the case of Dr J Gibson (decd) [2020] TC 07916 relates to pensions where a late claim for enhanced protection was allowed.

The First-Tier Tribunal found that the appellant had had a reasonable excuse for making a late claim for enhanced protection against the lifetime-allowance charge They also found that he had made the late claim without unreasonable delay after the reasonable excuse ceased.

Each reasonable-excuse case depends on its particular facts and the Tribunal followed the procedure established in Perrin, also a late-filing case:

• Ascertain the facts the taxpayer asserts give rise to the reasonable excuse;
• Determine which facts are proven;
• Decide whether, viewed objectively, those proven facts amount to reasonable excuse;
• If so, ascertain the time that reasonable excuse ceased;
• Decide whether the taxpayer remedied the failure without unreasonable delay thereafter.

Following that procedure the Tribunal judge decided that the appeal should succeed.

Second the case of Eurochoice Ltd [2020] TC 07925 related to joint and several liability for a director and company.

The First-tier Tribunal (FTT) allowed HMRC’s application for a direction that a company and its director be jointly and severally liable to pay HMRC’s costs in respect of the company’s unsuccessful VAT appeal.

Three key issues to remember:

1. Certain Tribunal deadlines were extended in response to the COVID-19 pandemic.
2. In complex cases the FTT can direct that a non-party to an appeal pay the costs of proceedings.
3. The FTT agreed with the view of the FTT in Ardmore Construction Ltd [2014] TC 03580, that it is not proper for HMRC to rely on unpublished tribunal decisions.

The last case of R & C Commrs v Warshaw [2021] BTC 504 deals with the percentages required to qualify for ER and BADR.

The Upper Tribunal has upheld the FTT’s decision (in Warshaw [2019] TC 07107) that a dividend payable at a specified percentage on a base amount that could vary was not payable at a fixed rate hence the shares on which it was payable were ordinary share capital. The question of whether shares form part of ordinary share capital is less likely to be an issue in the future following the tightening of the definition of ‘personal company’ in Finance Act 2019