Caselaw Digest
Caselaw Digest

Kevin John Pitt v The Commissioners For HMRC

22 January 2024
[2024] UKUT 21 (TCC)
Upper Tribunal
Mr. Pitt got a tax penalty because his tax avoidance scheme was similar to one already ruled illegal (Audley case). He argued the judges should only look at simple facts, not the overall scheme's purpose. The higher court disagreed, saying the law allows judges to consider the whole picture, not just individual details. The penalty stands.

Key Facts

  • Mr. Pitt received a penalty under the follower notice regime in the Finance Act 2014 for tax arrangements involving 'relevant discounted securities'.
  • HMRC argued that the case of Audley v HMRC was a 'relevant' judicial ruling, denying Mr. Pitt's claimed tax advantage.
  • Mr. Pitt appealed, arguing the FTT erred by considering 'post-Ramsay' analysis (evaluative conclusions and inferences) rather than only primary facts when comparing his case to Audley.
  • The arrangements involved the acquisition and disposal of loan notes, resulting in a claimed loss of £694,684 and tax relief of £278,557.60.
  • The FTT dismissed Mr. Pitt's appeal, finding no material differences between his case and Audley.

Legal Principles

A judicial ruling is 'relevant' under s205(3)(b) FA 2014 if its principles or reasoning, when applied to the taxpayer's arrangements, would deny the asserted tax advantage.

Finance Act 2014, sections 204, 205, 208, 214

HMRC must have an opinion that there is no scope for a reasonable person to disagree that the earlier ruling denies the taxpayer the advantage (Haworth).

R (on the application of Haworth) v Revenue and Customs Commissioners [2021] UKSC 25

'Principles laid down, or reasoning given' in a judicial ruling may include factual findings (Haworth). The realistic view of facts involves assessing facts in light of the statutory provision’s purpose (UBS AG v HMRC).

Haworth, UBS AG v HMRC [2016] UKSC 13

In assessing the relevance of a judicial ruling, a comparison of primary facts alone is insufficient; the application of the ruling's principles and reasoning to the taxpayer's facts requires judgment on material facts.

This case's judgment

Outcomes

Appeal dismissed.

The FTT correctly considered 'post-Ramsay' facts (evaluative conclusions and inferences drawn after a purposive interpretation of the legislation) in determining the relevance of Audley. The legislation doesn't exclude such facts from the analysis. The FTT's approach was consistent with the statutory requirement to determine whether the principles and reasoning in Audley, when applied to Mr. Pitt's arrangements, would deny the asserted tax advantage.

Similar Cases

Caselaw Digest Caselaw Digest

UK Case Law Digest provides comprehensive summaries of the latest judgments from the United Kingdom's courts. Our mission is to make case law more accessible and understandable for legal professionals and the public.

Stay Updated

Subscribe to our newsletter for the latest case law updates and legal insights.

© 2025 UK Case Law Digest. All rights reserved.

Information provided without warranty. Not intended as legal advice.