D bought 500,000 shares in TY 2009/10 for pounds 500,000 in Media Pro Four Ltd. In tax year 2010/11 he sold them to ‘Island House Private Charitable Trust’ for pounds 85,500, realising a loss of pounds 414,500. His 2009/10 tax return claimed share loss relief for that amount against income for that year under section 132 of the 2007 Act. HMRC identified the claim as possible tax avoidance.
In December 2011, his tax return for 2010/11, said that the relief for the loss of pounds 414,500 had already been claimed and relief obtained in 2009/10. In response, HMRC opened an enquiry into the claim for share loss relief. This was made under schedule
1A of the 1970 Act saying was a claim made ‘outside of a return’ and opened an enquiry into 2010/11 under section 9A of the 1970 Act. HMRC then demanded pounds 95,546.36 with interest. D sought judicial review of the demand. The two issues were:
(1) Whether, having exercised his right to claim the relevant loss relief in the previous year (2009/10), D was correct to deduct that loss in calculating his net income for that year; or whether, as HMRC contend, that right was overridden by schedule 1B of the 1970 Act, such that the loss, although claimed in year 2009/10, was to be treated as ‘relating to’ the following year.
(2) Whether, if it was an error for Mr Derry to make a claim for relief in the tax return for 2009/10, that claim is nonetheless part of the tax return for that year.
D failed on both issues in the UT. On the first issue, the CA found for HMRC. On the second issue, it found for D that the claim for relief was part of the 2009/10 return. As HMRC did not open an enquiry into the 2009/10 return in time, it granted judicial review. HMRC appealed on the second issue. D resists on that issue but sought to uphold the decision in any event on the first.
Judges:
Lord Reed DPSC, Lord Carnwath, Lady Black, Lady Arden, Lord Kitchin JJSC
Citations:
[2019] WLR(D) 243, [2019] 1 WLR 2754, [2019] UKSC 19, [2019] STC 926, [2019] 4 All ER 127, [2019] BTC 11
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
At UTTC – Derry, Regina (on The Application of) v Revenue and Customs UTTC 28-Jul-2015
UTTC Application for judicial review – self-assessment in annual return – claim to relief under Chapter 6 of Part 4 of Income Tax Act 2007 (dealing with share loss relief) – whether such a claim governed by . .
Appeal from (CA) – Derry, Regina (on The Application of) v HM Revenue and Customs CA 20-Jun-2017
‘The structure of Schedule 1B is that it applies to certain specified claims for relief involving two or more years. The provisions relating to loss relief are contained in paragraph 2. The remaining paragraphs deal with entirely separate claims, . .
Cited – Whitney v Inland Revenue HL 6-Nov-1925
Super-tax – Liability of non-resident alien in receipt of income from the United Kingdom – Service abroad of notice to make return of income – Finance (1909-10) Act, 1910 (10 Edw. VII, c. 8), Sections 66 and 72-Income Tax Act, 1918 (8 and 9 Geo. V, . .
Cited – Rouse, Regina (on The Application of) v HMRC UTTC 4-Dec-2013
UTTC PROCEDURE – review of decision – whether conclusions should be changed following later Supreme Court judgment – yes – review undertaken and decision altered . .
Cited – Cotter v Revenue and Customs SC 6-Nov-2013
This appeal asked as to the boundary between the jurisdiction of the First-tier Tribunal (Tax Chamber) and that of the county court or the High Court, and the legality of the approach which the Revenue took to entries which Mr Cotter, had made in a . .
Cited – Blackburn (HM Inspector of Taxes) v Keeling CA 21-Aug-2003
The tax payer sought to have reflected in his PAYE coding, his substantial trading losses arising from his activities as a Name /underwriter at Lloyds in 2003.
Held: The underwriting year 2003 ends in the year of assessment 2003/4, and . .
Cited – HM Revenue and Customs v Eclipse Film Partners No35 Llp UTTC 22-Mar-2013
UTTC Procedure – costs – whether, in a case where the taxpayer has opted out of the Complex costs regime, the First-tier Tribunal has the power to order that the parties share the costs of the appellant complying . .
Lists of cited by and citing cases may be incomplete.
Income Tax, Taxes Management
Updated: 03 February 2022; Ref: scu.636996