Pike v HM Revenue and Customs [2014] EWCA Civ 824 (20 June 2014)

Pike v HM Revenue and Customs [2014] EWCA Civ 824 (20 June 2014)

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, the loan stock was not a relevant discounted security under Schedule 13, and Mr Pike was not entitled to claim the loss for income tax purposes.

Citation
[2014] EWCA Civ 824
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
Tax Appeal / Second Appeal to Court of Appeal From Upper Tribunal (tax and Chancery Chamber)
Outcome
Appeal dismissed
Legal Topics
Relevant Discounted Security, Income Tax Relief, Interpretation of Interest Vs Premium, Finance Act 1996 Schedule 13
Tax Law Relevant Discounted Security Income Tax Relief Interpretation of Interest Vs Premium Finance Act 1996 Schedule 13

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Parties

Nicholas Pike

Appellant

The Commissioners for Her Majesty's Revenue and Customs

Respondents

Procedural Posture

Tax 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 was '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, the loan stock was not a relevant discounted security under Schedule 13, and Mr Pike was not entitled to claim the loss for income tax purposes.

Court Disposition

Appeal dismissed