Upper Tribunal Tax and Chancery Chamber

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

Fecha: 26-Mar-2024

Ground 3 – submissions

Ground 3 – submissions

HMRC’s submissions

61.

Ms Choudhury submitted that the FTT had erred in law at [53] by accepting the Respondents’ interpretation of the ToAA legislation, and finding that no liability arose for any of the Respondents because the distribution from RHG had been made to Relkeel. This appeared, Ms Choudhury contended, to have influenced the FTT’s conclusion at [61] that HMRC had enough information to complete their enquiries. The FTT had failed to appreciate that because the dividend was paid to Relkeel (a UK resident) the only consequence was that no income had become payable to a person abroad for the purposes of section 720 or section 732 ITA in respect of the transactions summarised by the FTT at [31] (see paragraph 15 above).

62.

However, Ms Choudhury argued, a charge could still arise under the ToAA provisions because there could still be income arising to a person abroad, such as the Settlement or any other entity linked to the investment of the £40 million distribution by means of a subsequent relevant transfer and any associated operations (broadly defined under section 719 ITA) after its receipt by the Settlement. Thus (and this was HMRC’s one remaining concern) the £40 million distribution may have been reinvested so that income may have arisen to an unidentified person abroad. If benefits had been provided to one or more of the Respondents which could be matched to that income in the years under enquiry then section 732 ITA might still apply and that could result in a charge to tax under section 731 ITA.

63.

HMRC, based on the information available to them to date, had not been able to identify the transactions by which (or whether) this had occurred. For this reason, HMRC had on 8 November 2022, shortly before the resumed FTT hearing on 28 November 2022, asked for financial statements of the Settlement for years after 2012/13 or any years for which statements were available. For the years before 2012/13 (for which Crowe LLP had stated no records were available) HMRC asked for:

(1)

Confirmation of the names and residents of the entity/entities to whom the £40 million passed;

(2)

Confirmation of whether the entity/entities in question retained the £40 million proceeds themselves or passed it onwards, invested it on behalf of, or in any other way acted to direct that value to one or more of the Respondents.

64.

If the Respondents provided that information, Ms Choudhury submitted, HMRC would be able to complete their enquiries.