Trustees of the Peter Buckley Settlement v The Commissioners for HMRC
[2024] UKFTT 29 (TC)
Jonathan Cooke v The Commissioners for HMRC
3 April 2024
[2024] UKFTT 272 (TC)
First-tier Tribunal
Someone claimed tax relief, but was one share short of the needed amount. The judge decided that a mistake had been made and, if it was fixed, the tax relief would apply. The judge said the paperwork would be changed to fix the mistake and the tax relief would be granted.
Key Facts
- •Jonathan Cooke disposed of shares in ISG Holdings Limited, realizing a gain of about £600,000.
- •He claimed entrepreneurs' relief, requiring at least 5% ordinary share capital ownership for one year prior to disposal.
- •Cooke held 4.99998%, one share short of the 5% threshold.
- •Cooke argued that High Court rectification of documents would show he held at least 5%, and the FTT should proceed as if rectified.
- •The Tribunal heard evidence from Cooke, sellers of shares, and ISG Holdings' finance director.
- •Witness statements contained identical sections, but the Tribunal found this acceptable as factual background.
Legal Principles
The FTT can determine whether a court would grant rectification and proceed as if rectification had been ordered.
Lobler v. HMRC [2015] UKUT 152 (TCC)
Rectification requires a common continuing intention, outward expression of accord, intention continuing at execution, and a mistake preventing reflection of the intention.
Swainland Builders Ltd v Freehold Properties Limited [2002]
Rectification will not be granted if the only effect is a fiscal benefit, but fiscal benefit alone does not bar rectification.
Racal Group Services [1995] STC 1151; Prowting 1968 Trustee One Limited v Amos-Yeo 2015 EWHC 2480
The court takes a relaxed approach to precise wording if the intended effect is clearly proven.
Giles v Royal National Institute of Blind People and Others [2014] EWHC 1373; Swainland Builders Ltd v Freehold Properties Ltd [2002]
Rectification requires clear evidence of the true intention, a flaw preventing effect being given to it, and specific intention with precision. There must also be a potentially contestable issue between the parties.
Racal Group Services Ltd v Ashmore [1995] STC 1151
Significant delay in seeking rectification or acquiescence can bar the remedy.
Milton Keynes Borough Council v Viridor (Community Recycling MK) Ltd [2017] EWHC 239 (TCC); Lindsay Petroleum Company v Hurd [1873] 5 AC 221
Outcomes
Appeal allowed.
The Tribunal found that the parties intended Cooke to acquire at least 5% of the shares to qualify for entrepreneurs' relief. The High Court would likely grant rectification as the mistake was clear, and the consequences extended beyond mere fiscal benefits, with small additional payments due to Cooke.