Nicholas Bell & Ors v The Commissioners for HMRC
[2023] UKFTT 989 (TC)
Graham Chisnall & Ors v The Commissioners for HMRC
5 October 2023
[2023] UKFTT 857 (TC)
First-tier Tribunal
People gave shares to charity and claimed tax relief. The tax office took a long time to decide and then used an expert who worked for them to say the shares were worth less. The judge decided the share prices on the stock market were better evidence, even though not many shares were traded each day, and let the people keep the tax relief.
Key Facts
- •Appellants gifted shares in AIM-listed companies (Frenkel Topping and Vista Group) to charity in 2004-2005.
- •They claimed tax relief based on share prices on AIM.
- •HMRC issued closure notices years later, valuing shares lower based on expert reports.
- •HMRC later disavowed reliance on the original expert reports and presented new evidence.
- •Appellants argued for dismissal due to HMRC's inordinate delay and abuse of process.
- •The market for the shares was thin, with limited trading days.
Legal Principles
Market value of shares is determined by a hypothetical sale in the open market, considering a willing vendor, reasonable marketing, and a prudent purchaser.
McArthur and Bloxham v Revenue And Customs [2021] UKFTT 237 (TC) at [15], and Netley at [203]
In determining market value, 'recognised stock exchange' includes AIM, but s 272(3) TCGA does not apply to AIM-listed shares.
Income and Corporation Taxes Act 1988 (ICTA) s 587B and s 841, Taxation of Chargeable Gains Act 1992 (TCGA) s 272, s 273
The Tribunal has jurisdiction to address abuse of process affecting the fairness of proceedings, even if the abuse occurred before the decision under appeal.
Foulser v HMRC [2013] UKUT 38 (TCC), Hackett v HM Revenue & Customs [2020] UKUT 212 (TCC), Alway Sheet Metal Limited v Revenue & Customs [2017] UKFTT 198 (TC), Nuttall v HMRC [2022] UKFTT 192 (TC)
Outcomes
Appellants' abuse of process application dismissed.
While HMRC's delay was acknowledged, the Appellants failed to demonstrate that it directly impacted the fairness of the hearing or resulted in the loss of relevant evidence.
Appeals allowed on the merits.
The Tribunal found that the AIM trading prices, though imperfect due to thin trading, provided more reliable evidence of market value than HMRC's expert valuations, which lacked sufficient explanation and were diminished by the expert's employment with HMRC.