Sinclair v Revenue & Customs (INCOME TAX/CORPORATION TAX : Exemptions and reliefs) [2018] UKFTT 740 (TC) (17 December 2018)

Sinclair v Revenue & Customs (INCOME TAX/CORPORATION TAX : Exemptions and reliefs) [2018] UKFTT 740 (TC) (17 December 2018)

The appellant did not create a valid trust by the email of 30 March 2012, as there was no certainty of subject matter or intention, and the arrangement was conditional. Therefore, there was no 'payment' for the purposes of post-cessation trade relief. Even if there had been a payment, it was not a qualifying payment as no damages had been agreed or awarded in the relevant tax year. Legal fees paid by the appellant in the relevant tax year were qualifying payments and eligible for relief.

Citation
[2018] UKFTT 740 (TC)
Parties
Appellant: David Sinclair; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
17 December 2018
Procedural Posture
Income Tax/corporation Tax Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal allowed in part and dismissed in part.
Legal Topics
Post Cessation Trade Relief, Income Tax Act 2007, Taxation of Chargeable Gains Act 1992, Trust Law, Tax Avoidance
Tax Law Post Cessation Trade Relief Income Tax Act 2007 Taxation of Chargeable Gains Act 1992 Trust Law Tax Avoidance

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Parties

David Sinclair

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax/corporation Tax Appeal / First Tier Tribunal (tax Chamber) Decision

Legal Issues

  1. 1 Whether a valid trust was created by the appellant's email of 30 March 2012
  2. 2 Whether the alleged trust constituted a 'payment' for the purposes of post-cessation trade relief
  3. 3 Whether any payment was a 'qualifying payment' under section 97 ITA 2007

Ratio Decidendi

The appellant did not create a valid trust by the email of 30 March 2012, as there was no certainty of subject matter or intention, and the arrangement was conditional. Therefore, there was no 'payment' for the purposes of post-cessation trade relief. Even if there had been a payment, it was not a qualifying payment as no damages had been agreed or awarded in the relevant tax year. Legal fees paid by the appellant in the relevant tax year were qualifying payments and eligible for relief.

Court Disposition

Appeal allowed in part and dismissed in part.

Orders

  • Post-cessation trade relief granted for £21,195.71 in legal fees paid in the tax year 2011-12.
  • Remainder of the appeal dismissed; no relief for the alleged trust payment of £400,000.