Anderson v Revenue and Customs (INCOME TAX/CORPORATION TAX : Losses) [2016] UKFTT 565 (TC) (10 August 2016)

Anderson v Revenue and Customs (INCOME TAX/CORPORATION TAX : Losses) [2016] UKFTT 565 (TC) (10 August 2016)

The Tribunal held that HMRC had a reasonable basis for the discovery assessment under s 29(1) TMA 1970, as they had sufficient information about Mr Anderson's involvement in the Bafana Scheme and its implementation issues to form a reasonable belief of under-assessment. The Tribunal further held that Mr Anderson's activities constituted investment, not trading, or were not carried on a commercial basis with a view to profit, and/or were connected to tax avoidance arrangements. Therefore, the losses claimed were not allowable as trading losses under the Income Tax Act 2007.

Citation
[2016] UKFTT 565
Parties
Appellant: Mr Jerome Anderson; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
10 August 2016
Procedural Posture
Income Tax/corporation Tax Appeal / First Tier Tribunal (tax) Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Trading Losses, Discovery Assessments, Tax Avoidance, Commercial Basis of Trade
Tax Law Income Tax Trading Losses Discovery Assessments Tax Avoidance Commercial Basis of Trade

Case Brief

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Parties

Mr Jerome Anderson

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the discovery assessment issued to Mr Anderson on 2 May 2012 was valid under s 29 TMA 1970
  2. 2 Whether the losses claimed by Mr Anderson are allowable as trading losses under s 64 or s 72 Income Tax Act 2007

Ratio Decidendi

The Tribunal held that HMRC had a reasonable basis for the discovery assessment under s 29(1) TMA 1970, as they had sufficient information about Mr Anderson's involvement in the Bafana Scheme and its implementation issues to form a reasonable belief of under-assessment. The Tribunal further held that Mr Anderson's activities constituted investment, not trading, or were not carried on a commercial basis with a view to profit, and/or were connected to tax avoidance arrangements. Therefore, the losses claimed were not allowable as trading losses under the Income Tax Act 2007.

Court Disposition

Appeal dismissed

Orders

  • The discovery assessment issued by HMRC on 2 May 2012 is upheld.
  • The losses claimed by Mr Anderson for the 2008-9 tax year are not allowable as trading losses.