Pulak Rakshit & Ors v The Commissioners for HMRC
[2023] UKFTT 1044 (TC)
The Commissioners for HMRC v LG Park HT1 Limited & Ors
17 October 2023
[2023] EWCA Civ 1193
Court of Appeal
A tax dispute about property value went to court. A lower court (FTT) said it was too early to decide the value until other issues were sorted out. A higher court (UT) disagreed. The highest court (Court of Appeal) said the FTT was right – it was better to sort out the other stuff first before figuring out the exact value.
Key Facts
- •HMRC and 10 respondent taxpayers (LG Parks) dispute stamp duty land tax (SDLT) payable on lease grants in 2010.
- •The dispute concerns the market value of leases over land in the London Gateway port development.
- •LG Parks applied to refer the market value question to the Upper Tribunal (Lands Chamber).
- •The FTT refused the application; the UT allowed LG Parks' appeal and directed a market value referral.
- •HMRC appeals the UT decision.
- •The dispute involves complex transactions, including a buyout and release of a minimum port requirement.
- •HMRC initially agreed the transactions should be treated as exchanges for SDLT purposes, meaning SDLT should be calculated on market value.
- •Closure notices were issued by HMRC in 2013, and appeals were lodged with the FTT in 2019.
- •The FTT considered whether to refer the valuation issue to the Lands Chamber while other issues remained.
- •The FTT decided against an immediate referral, believing other tax law questions needed prior determination.
Legal Principles
Appeals against case management decisions are subject to a high threshold. The Upper Tribunal should only interfere if the decision is plainly wrong.
HMRC v Ingenious Games LLP [2014] UKUT 0062 (TCC), Jalla v Shell International [2021] EWCA Civ 1559
An appeal to the UT lies only on a point of law. The UT may set aside the FTT’s decision if an error of law is identified and material.
Section 12 of the Tribunals, Courts and Enforcement Act 2007, Degorce v HMRC [2017] EWCA Civ 1427
Paragraph 45 of Schedule 10, FA 2003 mandates referral of market value questions to the Lands Chamber in SDLT appeals, but is silent on timing.
Paragraph 45 of Schedule 10 to the Finance Act 2003
The FTT must exercise its case management powers in accordance with the overriding objective, seeking a fair and just determination, proportionate approach, and avoidance of unnecessary delay.
FTT rules
The scope of the 'matter in question' in an SDLT appeal is determined by the FTT, considering the closure notice and surrounding circumstances. It may be broader than the specific conclusion in the notice.
Investec Asset Finance plc v HMRC [2020] EWCA Civ 579
Outcomes
The Court of Appeal allowed the appeal and set aside the UT decision.
The UT erred in law by setting aside the FTT decision without identifying a material error of law and by adopting an incorrect approach to paragraph 45 of Schedule 10, FA 2003. The FTT’s decision was within its case management discretion.
The Court of Appeal remade the UT Decision by dismissing the appeal against the FTT Decision.
The FTT correctly considered the appropriateness of an early reference to the Lands Chamber, given the complexity of the issues and the potential for further litigation. The FTT's emphasis was on whether referring the valuation question at that stage was appropriate under the overriding objective.