Pulak Rakshit & Ors v The Commissioners for HMRC
[2023] UKFTT 1044 (TC)
Redmount Trust Company Limited v The Commissioners for HMRC
16 March 2023
[2023] UKUT 68 (TCC)
Upper Tribunal
A company tried to avoid paying taxes using a clever scheme. They filed a tax return anyway, just in case. The tax office investigated and found they owed money. The court said the tax office could do this, even if the initial return wasn't strictly needed, and there was no time limit to issue a final tax bill.
Key Facts
- •Redmount Trust Company Limited (appellant) appealed a First-Tier Tribunal (FTT) decision upholding HMRC's closure notice and discovery assessment for £294,000 in unpaid stamp duty land tax (SDLT).
- •The appellant used an avoidance scheme involving an agreement to grant an option to purchase property, aiming to utilize sub-sale relief under section 45(3) Finance Act 2003.
- •HMRC opened an enquiry into the appellant's land transaction return (the Return) on September 13, 2012, and issued a closure notice on September 7, 2016, amending the Return to reflect the SDLT due.
- •The appellant argued the Return was 'voluntary' as no SDLT was due under the (initially) effective scheme, rendering the enquiry and closure notice invalid.
- •Finance Act 2013 retrospectively amended section 45(1A) of Finance Act 2003, rendering the avoidance scheme ineffective.
- •The appellant challenged the retrospective amendment's legality but was unsuccessful.
Legal Principles
Duty to deliver a land transaction return.
Finance Act 2003, section 76
HMRC's power to open an enquiry into a land transaction return.
Schedule 10, Finance Act 2003, paragraphs 12 and 13
Scope of HMRC's enquiry into a land transaction return.
Project Blue Ltd v HM Revenue & Customs [2018] UKSC 30
Time limits for assessments under Schedule 10, Finance Act 2003.
Schedule 10, Finance Act 2003, paragraph 31
Retrospective effect of deeming provisions.
Marshall (Inspector of Taxes) v Kerr [1993] STC 360
Outcomes
Appeal dismissed.
HMRC was entitled to open an enquiry into the Return, even if it was not strictly required, as a 'protective' return. The closure notice was not out of time; the four-year time limit in Schedule 10, paragraph 31(1) applies only to discovery assessments, not closure notices.