Degorce v Revenue and Customs [2017] EWCA Civ 1427 (06 October 2017)

Degorce v Revenue and Customs [2017] EWCA Civ 1427 (06 October 2017)

The Court of Appeal held that the FTT erred in law by failing to consider the wider context of Mr Degorce's activities, specifically his similar film-related transactions before and after 2006/07, and by treating the 2006/07 transaction as a one-off without adequate examination of the evidence. This error was material to the determination of whether Mr Degorce was carrying on a trade. The case was remitted to the FTT for reconsideration of the trade issue in light of the totality of Mr Degorce's activities.

Citation
[2017] EWCA Civ 1427
Parties
Appellant: Patrick Degorce; Respondents: The Commissioners for Her Majesty's Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
06 October 2017
Procedural Posture
Appeal From Upper Tribunal (tax and Chancery Chamber) / Court of Appeal Judgment
Outcome
Appeal allowed in part; case remitted to the First-tier Tribunal for reconsideration of the trade issue.
Legal Topics
Income Tax Loss Relief, Definition of Trade, Film Investment Schemes, Tax Avoidance, Application of Badges of Trade, Commercial Basis of Trade, Section 380 ICTA 1988
Tax Law Income Tax Loss Relief Definition of Trade Film Investment Schemes Tax Avoidance Application of Badges of Trade Commercial Basis of Trade Section 380 ICTA 1988

Case Brief

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Parties

Patrick Degorce

Appellant

The Commissioners for Her Majesty's Revenue and Customs

Respondents

Procedural Posture

Appeal From Upper Tribunal (tax and Chancery Chamber) / Court of Appeal Judgment

Legal Issues

  1. 1 Whether Mr Degorce was carrying on a trade for the purposes of section 380(1) ICTA 1988 in the 2006/07 tax year
  2. 2 Whether the trade was carried on on a commercial basis and with a view to profit under section 384(1) ICTA 1988
  3. 3 Whether the FTT erred in law by failing to consider the wider context of Mr Degorce's activities

Ratio Decidendi

The Court of Appeal held that the FTT erred in law by failing to consider the wider context of Mr Degorce's activities, specifically his similar film-related transactions before and after 2006/07, and by treating the 2006/07 transaction as a one-off without adequate examination of the evidence. This error was material to the determination of whether Mr Degorce was carrying on a trade. The case was remitted to the FTT for reconsideration of the trade issue in light of the totality of Mr Degorce's activities.

Court Disposition

Appeal allowed in part; case remitted to the First-tier Tribunal for reconsideration of the trade issue.

Orders

  • The decision of the Upper Tribunal and the FTT on the trade issue is set aside.
  • The case is remitted to the First-tier Tribunal for redetermination of whether Mr Degorce was carrying on a trade in 2006/07, considering the full context of his activities.