Timothy Watts v The Commissioners for HMRC

Timothy Watts v The Commissioners for HMRC

The Upper Tribunal held that the proper construction of 'the amount payable on the transfer' under paragraph 14A(3)(b) Schedule 13 Finance Act 1996 includes both the payment made by Investec to the trustee for assignment of the option and the payment made to the Appellant for exercise of the option. The composite transaction must be viewed as a whole, and only real commercial losses are eligible for relief. The appeal was dismissed as there was no material error of law in the FTT's approach.

Parties
Appellant: Timothy Watts; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
12 June 2024
Procedural Posture
Tax Appeal / Upper Tribunal Appeal From First Tier Tribunal
Outcome
Appeal dismissed
Legal Topics
Income Tax, Tax Avoidance, Loss Relief, Statutory Construction
Tax Law Income Tax Tax Avoidance Loss Relief Statutory Construction

Case Brief

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Parties

Timothy Watts

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / Upper Tribunal Appeal From First Tier Tribunal

Legal Issues

  1. 1 Proper construction of 'the amount payable on the transfer' under paragraph 14A(3)(b) Schedule 13 Finance Act 1996
  2. 2 Whether payments made to a trustee are included in the amount payable on transfer for loss determination
  3. 3 Application of purposive statutory interpretation in tax avoidance schemes

Ratio Decidendi

The Upper Tribunal held that the proper construction of 'the amount payable on the transfer' under paragraph 14A(3)(b) Schedule 13 Finance Act 1996 includes both the payment made by Investec to the trustee for assignment of the option and the payment made to the Appellant for exercise of the option. The composite transaction must be viewed as a whole, and only real commercial losses are eligible for relief. The appeal was dismissed as there was no material error of law in the FTT's approach.

Court Disposition

Appeal dismissed

Orders

  • The FTT Decision is confirmed.
  • No material error of law found.