Pike v HM Revenue and Customs

Pike v HM Revenue and Customs

The additional payment under condition 2.1(ii) was interest, not a premium, as it accrued daily at a specified rate on the principal and was compensation for the use of money; therefore, it must be excluded from the redemption amount, so the loan stock was not a relevant discounted security and no loss relief was available.

Parties
Appellant: Nicholas Pike; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
20 June 2014
Procedural Posture
Civil Appeal / Second Appeal to Court of Appeal From Upper Tribunal (tax and Chancery Chamber)
Outcome
Appeal dismissed
Legal Topics
Income Tax, Relevant Discounted Security, Interpretation of Interest Vs Premium, Schedule 13 Finance Act 1996
Tax Law Income Tax Relevant Discounted Security Interpretation of Interest Vs Premium Schedule 13 Finance Act 1996

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Parties

Nicholas Pike

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Civil Appeal / Second Appeal to Court of Appeal From Upper Tribunal (tax and Chancery Chamber)

Legal Issues

  1. 1 Whether the loan stock issued to Mr Pike was a 'relevant discounted security' under Schedule 13 to the Finance Act 1996
  2. 2 Whether the additional amount payable on redemption constituted 'interest' or a 'premium' for the purposes of the legislation

Ratio Decidendi

The additional payment under condition 2.1(ii) was interest, not a premium, as it accrued daily at a specified rate on the principal and was compensation for the use of money; therefore, it must be excluded from the redemption amount, so the loan stock was not a relevant discounted security and no loss relief was available.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed.