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

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

The appellant's transactions were not trading but investment loans; the form of repeated reinvestment and fictitious interest receipts in a Ponzi-style scheme meant no realistic interest was received for tax purposes; thus, the appellant is not liable for tax on the alleged interest income.

Citation
[2011] UKFTT 807 (TC)
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 Judgment
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

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Parties

MM

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the appellant was making loans as an investment or trading
  2. 2 Whether interest income had been received for tax purposes

Ratio Decidendi

The appellant's transactions were not trading but investment loans; the form of repeated reinvestment and fictitious interest receipts in a Ponzi-style scheme meant no realistic interest was received for tax purposes; thus, the appellant is not liable for tax on the alleged interest income.

Court Disposition

Appeal allowed

Orders

  • HMRC's assessment for tax on interest income is discharged; appellant not liable for tax on alleged interest income.