UT-2023-000051 - [2024] UKUT 00114 (TCC)

We reject HMRC’s submissions.

It was clear that the FTT had section 732 ITA in mind – HMRC had raised the issue in their skeleton argument at the November 2022 hearing – and specifically addressed the issue at [58]. Moreover, we accept Mr Gordon’s submission that the FTT did not say at [53] that no tax liability could arise simply because the distribution had been made to Relkeel.

In our view, the FTT took an overall view, balancing the various factors, and concluded that the enquiry had been unduly prolonged and should be brought to a close. There seems no doubt that HMRC’s mistaken view of the facts (maintained even as late as the November 22 hearing) prolonged the enquiry, even though the FTT reached its decision without considering the reasons for the delay. The view that the enquiry had gone on for too long (see [63]) was one which the FTT was perfectly entitled to reach in its overall evaluative judgment as to whether the enquiry should be brought to a close. We do not consider that the FTT erred in reaching its conclusion.