Stratton v Revenue & Customs [2012] UKFTT 578 (TC) (15 October 2013)

Stratton v Revenue & Customs [2012] UKFTT 578 (TC) (15 October 2013)

The appellant acquired the shares by reason of employment and the terms of acquisition made them 'conditional shares' under section 424 ITEPA 2003. The gain on disposal was therefore chargeable to income tax as employment income, not capital gains tax. The appellant negligently submitted an incorrect tax return by failing to consider or apply the relevant statutory provisions, and there was no reasonable excuse for the failure to provide documents or for the negligent return.

Citation
[2012] UKFTT 578
Parties
Appellant: Peter Stratton; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
15 October 2013
Procedural Posture
Tax Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Employment Income, Conditional Shares, Penalties for Incorrect Tax Returns, Capital Gains Tax, Tax Return Amendments
Tax Law Income Tax Employment Income Conditional Shares Penalties for Incorrect Tax Returns Capital Gains Tax Tax Return Amendments

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Parties

Peter Stratton

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax Chamber) Decision

Legal Issues

  1. 1 Whether the gain from disposal of shares was chargeable to income tax as employment income or to capital gains tax
  2. 2 Whether the shares disposed of were 'conditional shares' under ITEPA 2003
  3. 3 Whether the appellant negligently delivered an incorrect tax return under section 95(1)(a) TMA 1970

Ratio Decidendi

The appellant acquired the shares by reason of employment and the terms of acquisition made them 'conditional shares' under section 424 ITEPA 2003. The gain on disposal was therefore chargeable to income tax as employment income, not capital gains tax. The appellant negligently submitted an incorrect tax return by failing to consider or apply the relevant statutory provisions, and there was no reasonable excuse for the failure to provide documents or for the negligent return.

Court Disposition

Appeal dismissed

Orders

  • The amendment to the appellant's self-assessment tax return for 2006–07 is upheld.
  • The penalties under sections 95 and 97AA TMA 1970 are upheld.