Focus on some recent tax cases

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.

June 2021

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.

The first case is Phillips [2021] TC 08074; [2021] UKUT 82 (TCC) in which the First-Tier Tribunal (FTT) confirmed HMRC’s decision that the terms of an engagement were those of self-employment. Philips claimed to have been employed. The FTT decided that there was insufficient control to demonstrate employment and that the other provisions of the engagement were not consistent with employment. This case applied the standard tests as defined and developed over time, following the principles laid down in Ready Mixed Concrete. However, the case highlights that each of the factors regarding employment status will have different weight in different circumstances.

The second case is He [2021] TC 08062; [2021] UKFTT 0077 (TC) in which the FTT allowed the taxpayer to make late appeals in respect of VAT and income tax assessments, finding that the non-English speaking taxpayer had done all he could to prevent delays by appointing Mandarin speaking advisers. The failings of those advisers should not be attributable to him. Although this may seem of limited application, you should consider the upcoming introduction of MTD which will seem like a foreign language to many people, particularly unrepresented taxpayers. With it will come a need to understand a new system and the complexities of tax that even some tax advisers struggle to deal with. Will MTD be a catalyst for retirement?

The third case is Charlton Chauffeur Drive Ltd [2021] TC 08042 in which the FTT determined that a sum paid under a settlement agreement (relating to the embezzlement by an employee) was a revenue receipt of the trade. This case examines the distinction between a capital receipt and a revenue receipt of the trade. The FTT rejected the argument advanced by the taxpayer that the settlement was solely in exchange for the surrender of the right to litigate; the taxpayer entered into the agreement to recover its losses in a low cost, low risk manner.