Audley v Revenue & Customs [2011] UKFTT 219 (TC) (01 April 2011)

Audley v Revenue & Customs [2011] UKFTT 219 (TC) (01 April 2011)

The Tribunal held that, applying a purposive interpretation of Schedule 13 Finance Act 1996 and taking a realistic view of the facts, the transfer of the house to the trust was in substance a gift and not part of the amount paid for the acquisition of the loan note. Only the cash of £250,000 could potentially be considered as paid, but the actual value of the loan note at issue was £35,700. Therefore, the appellant did not sustain a loss as claimed, and the appeal was dismissed.

Citation
[2011] UKFTT 219 (TC)
Parties
Appellant: Mr Robert Audley; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
01 April 2011
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax), Substantive Hearing and Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Corporation Tax, Tax Avoidance, Relevant Discounted Securities, Loss Relief, Purposive Statutory Interpretation
Tax Law Income Tax Corporation Tax Tax Avoidance Relevant Discounted Securities Loss Relief Purposive Statutory Interpretation

Case Brief

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Parties

Mr Robert Audley

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax), Substantive Hearing and Decision

Legal Issues

  1. 1 What is the correct amount 'paid' by the appellant in respect of his acquisition of a relevant discounted security (RDS) for the purposes of Schedule 13 Finance Act 1996, in the context of a tax avoidance scheme involving the transfer of a house and cash to a family trust and the issue of a loan note?

Ratio Decidendi

The Tribunal held that, applying a purposive interpretation of Schedule 13 Finance Act 1996 and taking a realistic view of the facts, the transfer of the house to the trust was in substance a gift and not part of the amount paid for the acquisition of the loan note. Only the cash of £250,000 could potentially be considered as paid, but the actual value of the loan note at issue was £35,700. Therefore, the appellant did not sustain a loss as claimed, and the appeal was dismissed.

Court Disposition

Appeal dismissed

Orders

  • The appellant's claimed loss on the disposal of a relevant discounted security is disallowed; the closure notice reducing the loss to nil is upheld.