Lynch v Revenue and Customs (Income Tax - Ramsay doctrine and s381 ITTOIA 2005 - profit income or capital - procedural validity of discovery assessment - s29(5) TMA test - distinct parts of an insufficiency of tax - Human Rights and High Income Child Benefit Charge) [2025] UKFTT 300 (TC) (10 March 2025)

Lynch v Revenue and Customs (Income Tax - Ramsay doctrine and s381 ITTOIA 2005 - profit income or capital - procedural validity of discovery assessment - s29(5) TMA test - distinct parts of an insufficiency of tax - Human Rights and High Income Child Benefit Charge) [2025] UKFTT 300 (TC) (10 March 2025)

The Tribunal held that the Ramsay doctrine does not defeat the dry tax charge because s381 ITTOIA 2005 requires a single transaction view, taxing all discounts and premiums of an income nature, even if arising from pre-ordained tax avoidance schemes. The procedural requirements for a valid discovery assessment under s29(5) TMA were met because the hypothetical officer could not have been reasonably expected to be aware of the insufficiency of tax based on the information provided. The human rights challenge to the High Income Child Benefit Charge was dismissed.

Citation
[2025] UKFTT 300
Parties
Appellant: Brian Lynch; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
10 March 2025
Procedural Posture
Tax Appeal / First Tier Tribunal (tax Chamber) Judgment on Liability
Outcome
Appeal dismissed
Legal Topics
Income Tax, Tax Avoidance Schemes, Discovery Assessment, Ramsay Doctrine, High Income Child Benefit Charge, Procedural Validity, Capital Vs Income Distinction
Tax Law Administrative Law Human Rights Income Tax Tax Avoidance Schemes Discovery Assessment Ramsay Doctrine High Income Child Benefit Charge +2 more

Case Brief

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Parties

Brian Lynch

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax Chamber) Judgment on Liability

Legal Issues

  1. 1 Whether the Ramsay doctrine defeats the 'dry tax' income tax charge under s381 ITTOIA 2005
  2. 2 Whether the procedural requirements for a valid discovery assessment under s29(5) TMA were met
  3. 3 Whether the imposition of the High Income Child Benefit Charge breaches human rights

Ratio Decidendi

The Tribunal held that the Ramsay doctrine does not defeat the dry tax charge because s381 ITTOIA 2005 requires a single transaction view, taxing all discounts and premiums of an income nature, even if arising from pre-ordained tax avoidance schemes. The procedural requirements for a valid discovery assessment under s29(5) TMA were met because the hypothetical officer could not have been reasonably expected to be aware of the insufficiency of tax based on the information provided. The human rights challenge to the High Income Child Benefit Charge was dismissed.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed as regards liability for the tax years 2010/11, 2012/13, and 2013/14 as set out in the closure notices.
  • The appeal against the discovery assessment for 2011/12 is dismissed, subject to reduction of the quantum to £3,652,638 by agreement of the parties.