Income tax
Appeal dismissed on sporting image rights
The First-tier Tribunal (FTT) has found that it was the individual, not the company he had assigned his image rights to, that had entered into sponsorship agreements. Therefore, the income was taxable on him.
The taxpayer, a professional cricketer, assigned his intellectual property rights to a company in 2005. He made agreements with sporting brands that paid for the use of his image. These agreements were between him and the brands, though the money was returned in his company’s accounts. HMRC contended he remained the person legally entitled to the income derived from these, rather than the company, and that as such the money was taxable on him directly as profits from self-employment. It issued closure notices for four tax years.
The taxpayer argued that his agreements with the brands related to publicity, and that as he had assigned the rights to the company he had no legal right to benefit from the agreements. He also stated that due to an earlier HMRC enquiry involving sponsorship income, which had been closed, he had a legitimate expectation that the receipts would be assessed on the company.
The FTT found for HMRC. There was no evidence that the taxpayer’s company was party to the agreements between him and the brands, or even that it received the income. It also found that it could not consider his argument on legitimate expectation.
This case is a useful reminder to businesses, particularly small businesses not within the scope of the off-payroll working rules, that robust documentation is essential to protect against unintended tax consequences.
Collingwood v HMRC [2025] UKFTT 1065 (TC)
From Tax Update September 2025, published by S&W Partners LLP
Inheritance tax
FTT rules on the meaning of life (for IHT purposes)
The First-tier Tribunal (FTT) has found that ‘life’ in the IHT legislation can refer both to human life, for an individual settlor, and live companies for corporate settlors.
The taxpayer, a company, established a remuneration trust in 2005. The decennial charge therefore arose in 2015, the amount was not in dispute. HMRC issued a notice of determination in 2020.
The taxpayer appealed on the grounds that the legislation refers to life (“where the transfer is made during the life of the settlor”), and as a company it was not alive. The FTT was referred to a dictionary which defined life as:
“Life noun (Time alive): The period between birth and death, or the experience or state of being alive
Life noun (Time of operation): The period for which a machine or organisation lasts.”
The FTT dismissed the argument that ‘life’ should take its ordinary meaning as the period between birth and death of a living thing. Its view was that the legislation was clearly intended to cover both individual and corporate settlors, so the reference to life should not be read as purely to human life, but also to ‘live’ companies, being those on the register.
Lexgreen Services Ltd v HMRC [2025] UKFTT 1019 (TC)
From Tax Update September 2025, published by S&W Partners LLP
Property tax
Taxpayers win appeal on multiple dwellings relief
The First-tier Tribunal (FTT) has found that an annexe qualified as a separate dwelling for stamp duty land tax (SDLT) purposes, and multiple dwellings relief (MDR) applied. This was a finely balanced decision hinging on the position and facilities.
The taxpayers bought a detached three-bed home, with an ‘annexe’ structure attached to the side. This was previously the garage, but had been converted to single-storey accommodation. It had its own front door, a utility room/kitchen and a bathroom. The utility room had a door that opened into the hallway of the main house.
In terms of utilities, the annexe had electric heaters and running water, but drew hot water from the boiler in the main home. The annexe did not have a separate postal address, council tax registration, nor meters.
HMRC argued that this annexe was part of the main dwelling house, not a dwelling in its own right. The FTT found for the taxpayer that this was a separate dwelling, considering all the factors, as although a finely balanced case, this could be occupied as a separate dwelling. The door between the annexe and house could be locked, and shared bills could be addressed in a tenancy agreement.
Berell & Anor v HMRC [2025] UKFTT 1067 (TC)
From Tax Update September 2025, published by S&W Partners LLP
Practical Points
Every month, the Tax Faculty publishes short, practical pieces of guidance to help agents and practitioners in their day-to-day work.
