Key Facts
- •The Appellant inherited a property in 1997.
- •In 2000, the Appellant was declared bankrupt, and beneficial ownership vested in his trustee in bankruptcy.
- •The Appellant was discharged from bankruptcy in 2003.
- •In 2016, the Appellant sold the property.
- •The Respondents issued a discovery assessment for capital gains tax in 2020.
- •The Appellant appealed, arguing he was not the beneficial owner during the bankruptcy.
Legal Principles
Beneficial ownership of a bankrupt's assets automatically vests in the trustee in bankruptcy under Section 306 of the Insolvency Act 1986.
Insolvency Act 1986, Section 306
Section 66 of the Taxation of Chargeable Gains Act 1992 (TCGA) deems assets held by a trustee in bankruptcy to be vested in the bankrupt for capital gains tax purposes, disregarding acquisitions and disposals between the bankrupt and the trustee.
Taxation of Chargeable Gains Act 1992, Section 66
Promissory estoppel requires a pre-existing legal relationship, a clear and unequivocal promise, intention to affect legal relations, and detrimental reliance.
Harvey v Dunbar Assets PLC [2017] EWCA Civ 60; Johnson v Gore Wood & Co [2002] 2 A.C. 1
Tax authorities are generally free to change legal arguments during a tax dispute, subject to fairness and proper case management.
Tower M’Cashback v HMRC [2011] SC 19; Telent Technology Services Limited v HMRC [2022] UKFTT 00147 (TC)
For late appeals, the Tribunal considers the length of delay, reasons for delay, detriment to the applicant, and detriment to the respondent (Martland v HMRC [2018] UKUT 178 (TCC)).
Martland v HMRC [2018] UKUT 178 (TCC)
Outcomes
Appeal dismissed.
Section 66 of the TCGA deems the Appellant to have remained the beneficial owner throughout the bankruptcy period. The estoppel argument failed because there was no clear and unequivocal promise by HMRC, and the Appellant did not suffer detrimental reliance.