MM v Revenue & Customs [2011] UKFTT 807 (TC) (09 December 2011)

MM v Revenue & Customs [2011] UKFTT 807 (TC) (09 December 2011)

The appellant was not trading but making loans to the firearms company. The form of the transactions was artificial, with high interest rates used to lure reinvestment. The reality was a Ponzi-style scheme where the appellant never genuinely received interest, as all repayments and interest were immediately reinvested and ultimately lost. Therefore, no taxable interest was realistically received, and the assessments for interest income were discharged.

Citation
[2011] UKFTT 807
Parties
Appellant: MM; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
09 December 2011
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax) Final Decision
Outcome
Appeal allowed
Legal Topics
Income Tax, Interest Income, Trading Vs Investment, Ponzi Scheme, Loss Relief
Tax Law Income Tax Interest Income Trading Vs Investment Ponzi Scheme Loss Relief

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 2 Authorities cited 1 Party arguments 2 Amounts and remedies 7
Sign in to unlock

Parties

MM

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the appellant's transactions were loans or trading activities
  2. 2 Whether interest income was actually received for tax purposes
  3. 3 Whether losses could be offset against earlier profits

Ratio Decidendi

The appellant was not trading but making loans to the firearms company. The form of the transactions was artificial, with high interest rates used to lure reinvestment. The reality was a Ponzi-style scheme where the appellant never genuinely received interest, as all repayments and interest were immediately reinvested and ultimately lost. Therefore, no taxable interest was realistically received, and the assessments for interest income were discharged.

Court Disposition

Appeal allowed

Orders

  • Assessments for interest income discharged
  • No costs awarded