Syngenta Holdings Limited v The Commissioners for HMRC
[2024] UKFTT 998 (TC)
Benoît D'Angelin v The Commissioners for HMRC
30 May 2024
[2024] UKFTT 462 (TC)
First-tier Tribunal
A non-domiciled individual invested foreign money in his UK company and claimed a tax break. He then used company funds for personal expenses via a loan. The tax authorities said this broke the rules, and the court agreed. The court decided that even if the individual didn't profit overall, using company money for personal use without proper agreements voided the tax break, even if such practices are sometimes seen in similar businesses. The court also found that these rules were fair and did not break any human rights.
Key Facts
- •Mr. d'Angelin, a UK resident but non-domiciled banker, invested £1.5m of foreign income into his newly founded UK company, d'Angelin and Co Ltd (DAC).
- •He claimed Business Investment Relief (BIR) to avoid UK tax on this remittance.
- •DAC provided Mr. d'Angelin with a director's loan account (DLA), which he used to pay personal expenses, resulting in a balance of approximately £71,000.
- •HMRC denied BIR, arguing the DLA constituted an 'extraction of value' under ITA 2007 s 809VH, resulting in an additional tax liability of £675,000.
Legal Principles
Statutory interpretation should reflect the ordinary and natural meaning of words and accord with the legislation's purpose.
R (oao The Good Law Project) v Electoral Commission [2018] EWHC 2414 (Admin), [2019] EWCA Civ 1567
'Value' in ITA 2007 s 809VH does not require a net benefit to the recipient; the consideration given is ignored.
HMRC's argument
The extraction of value rule aims to 'ring-fence' foreign income, preventing it from leaking out tax-free except through taxable remuneration or dividends on arm's-length terms.
HMRC's argument and supporting documents
The exemption in ITA 2007 s 809VH(3) requires value to be received in the ordinary course of business and on arm's-length terms.
ITA 2007 s 809VH(3)
A1P1 of the ECHR must be considered in interpreting legislation, ensuring compatibility with human rights. However, the right to control the use of property and secure tax payments is not impaired.
A1P1 ECHR, Joost Lobler v HMRC [2015] UKUT 152 (TCC)
Outcomes
Appeal dismissed.
The DLA constituted an extraction of value under ITA 2007 s 809VH, as the natural and ordinary meaning of 'value' does not require a net benefit. The DLA was not provided on arm's-length terms, failing to meet the exemption in s 809VH(3).
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