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 Ramsay doctrine does not defeat the Dry Tax Charge because s381 ITTOIA 2005 requires a single-transaction view and applies to all discounts, including those arising in pre-ordained tax avoidance schemes. The QCB discounts and premiums were income in nature as they compensated for foregone interest, not capital risk. The discovery assessment was procedurally valid because the hypothetical officer could not have been reasonably expected to be aware of the insufficiency of tax based on the information made available. The High Income Child Benefit Charge does not breach human rights.

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

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Parties

Brian Lynch

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the Ramsay doctrine defeats the 'Dry Tax Charge' under s381 ITTOIA 2005
  2. 2 Whether discounts/premiums on QCBs are income or capital in nature
  3. 3 Whether the discovery assessment was procedurally valid under s29(5) TMA

Ratio Decidendi

The Ramsay doctrine does not defeat the Dry Tax Charge because s381 ITTOIA 2005 requires a single-transaction view and applies to all discounts, including those arising in pre-ordained tax avoidance schemes. The QCB discounts and premiums were income in nature as they compensated for foregone interest, not capital risk. The discovery assessment was procedurally valid because the hypothetical officer could not have been reasonably expected to be aware of the insufficiency of tax based on the information made available. The High Income Child Benefit Charge does not breach human rights.

Court Disposition

Appeal dismissed

Orders

  • Appeal against liability in closure notices for 2010/11, 2012/13, and 2013/14 dismissed
  • Appeal against discovery assessment for 2011/12 dismissed, but quantum reduced to £3,652,638 by agreement