Sheth v Revenue and Customs (INCOME TAX - loan contractor scheme - were sums paid to offshore trusts and then lent to the appellant taxable on him as employment income? - yes on the basis of Rangers) [2023] UKFTT 368 (TC) ( 13 April 2023)

Sheth v Revenue and Customs (INCOME TAX - loan contractor scheme - were sums paid to offshore trusts and then lent to the appellant taxable on him as employment income? - yes on the basis of Rangers) [2023] UKFTT 368 (TC) ( 13 April 2023)

The sums paid to offshore trusts and then lent to Dr Sheth were taxable as employment income under ITEPA 2003 s.62, as established by the Supreme Court in Rangers. The discovery assessments were valid and in time, as the hypothetical officer could not reasonably have been expected to be aware of the insufficiency from the information provided. The tribunal had no jurisdiction to review HMRC's discretion to impose liability on the appellant. The appeal was dismissed and the assessment for 2010/2011 was to be increased to reflect the full amount of loans received.

Citation
[2023] UKFTT 368 (TC) ( 13
Parties
Appellant: Dr Pradip Kumar Sheth; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax) Final Judgment
Outcome
Appeal dismissed
Legal Topics
Income Tax, Employment Income, Tax Avoidance Schemes, Discovery Assessments, DOTAS Disclosure, PAYE, Offshore Trusts, Loans as Earnings
Tax Law Income Tax Employment Income Tax Avoidance Schemes Discovery Assessments DOTAS Disclosure PAYE Offshore Trusts +1 more

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Parties

Dr Pradip Kumar Sheth

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax) Final Judgment

Legal Issues

  1. 1 Whether sums paid to offshore trusts and then lent to the appellant are taxable as employment income under ITEPA 2003 section 62.
  2. 2 Whether the discovery assessments issued by HMRC were valid and in time under TMA 1970 section 29.
  3. 3 Whether the hypothetical officer could have been reasonably expected to be aware of the insufficiency based on the information provided.

Ratio Decidendi

The sums paid to offshore trusts and then lent to Dr Sheth were taxable as employment income under ITEPA 2003 s.62, as established by the Supreme Court in Rangers. The discovery assessments were valid and in time, as the hypothetical officer could not reasonably have been expected to be aware of the insufficiency from the information provided. The tribunal had no jurisdiction to review HMRC's discretion to impose liability on the appellant. The appeal was dismissed and the assessment for 2010/2011 was to be increased to reflect the full amount of loans received.

Court Disposition

Appeal dismissed

Orders

  • Assessments for 2009/2010 and 2010/2011 upheld as valid and in time.
  • Assessment for 2010/2011 to be increased to reflect the full amount of loans received; parties to resolve the precise amount of additional tax due.