Olu Olufote v The Commissioners for HMRC
[2023] UKFTT 130 (TC)
Brindleyplace Holdings S.À R.L v The Commissioners for HMRC
6 September 2024
[2024] UKFTT 808 (TC)
First-tier Tribunal
A company bought a property through a complicated deal. The taxman said they owed extra tax. The court decided the company didn't owe the extra tax because they used legal ways to reduce their tax bill, not illegal tax avoidance schemes.
Key Facts
- •Brindleyplace Holdings S.à r.l. (BP Holding) appealed against SDLT assessments totaling £8,071,265.
- •The assessments related to the acquisition of a partnership interest and subsequent property transfer in 2015.
- •The acquisition involved purchasing a majority stake in a unit trust, the general partner of a limited partnership, and a partnership interest.
- •HMRC argued that the transaction was a 'Type A' transfer under Schedule 15 FA 2003 and that group relief was unavailable under Schedule 7 FA 2003.
- •BP Holding argued that no consideration was given for the acquisition of the partnership interest and that the transaction qualified for group relief.
Legal Principles
Statutory interpretation of taxing statutes requires a purposive approach, considering the provisions as a whole, context, and Parliament's intention.
R (Project for the Registration of Children As British Citizens) v Secretary of State for the Home Department [2022] UKSC 3; Rossendale BC v Hurstwood Properties (A) Ltd [2021] UKSC 16
Explanatory Notes to Finance Bills can aid construction by shedding light on the statute's objective and mischief but should not override the statutory language.
Big Bad Wolff Ltd v HMRC [2019] UKUT 12
A 'Type A' transfer under Schedule 15 FA 2003 requires consideration to be given for the acquisition of a partnership interest, not merely given under the same arrangement.
Paragraph 14(3A) Schedule 15 FA 2003; Explanatory Notes to clause 94 of and schedule 31 to the Finance Bill 2008
Group relief under Schedule 7 FA 2003 is denied if a transaction is not for bona fide commercial reasons or has tax avoidance as a main purpose.
Paragraph 2(4A) Schedule 7 FA 2003
Determining the 'main purpose' for tax avoidance involves an inquiry into subjective intentions, distinguishing objects from effects and consequences.
Blackrock HoldCo 5, LLC v Revenue and Customs Comrs [2024] STC 740; Kwik-Fit Group Ltd v Revenue and Customs Comrs [2024] STC 897; JTI Acquisition Company (2011) Ltd v Revenue and Customs Comrs [2024] EWCA Civ 652
Tax avoidance is distinguished from tax mitigation; avoidance conflicts with Parliament's intention, while mitigation uses legally available options with economic consequences.
Inland Revenue Commissioners v Willoughby [1997] 1 WLR 1071
Section 75A FA 2003 applies if (1) one person disposes of a chargeable interest and another acquires it, (2) multiple transactions are connected, and (3) total SDLT is less than on a notional transaction.
Section 75A FA 2003
Outcomes
Appeal allowed in respect of Closure Notice 1.
The transaction was not a 'Type A' transfer because consideration was not given for the acquisition of the partnership interest itself.
Appeal allowed in respect of Closure Notice 2.
The transaction was for bona fide commercial reasons, and tax avoidance was not a main purpose. Section 75A did not apply because the relevant date for determining the parties was the date of the transfer.
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