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

Mr Gordon, appearing for the Respondents, submitted that the guidance in Beneficial House was not intended to be a rigid checklist. In any event, the FTT had in fact applied the Beneficial House principles. The FTT had reached an evaluative conclusion at [58], based on its findings at [56 (a), (b) and (c)] and [57], that HMRC were not entitled to further investigate the destination of the £40 million distribution. This was, Mr Gordon argued, a straightforward application of Principle 1, viz that the FTT was required “to exercise a value judgment determining what was reasonable on the facts and circumstances of the particular case… This involves a balancing exercise.”

Furthermore, there was a clear reference to Principle 4 at [60] when the FTT concluded that HMRC were now in a position to make an informed judgment, “even though every line of enquiry may not have been pursued to the end.”

Mr Gordon submitted that Principles 2 and 3 focused on the question of proportionality, but they were merely an expansion of Principle 1. The second sentence of [60] was an obvious reference to Principle 2. The reference to the terms of a closure notice being “vague and uninformative” were a reference to Principle 6. The reference at [63] to the protracted nature of the enquiry was a reference to Principles 1 and 3.

Therefore, Mr Gordon contended that the FTT had the guidance set out in Beneficial House clearly in mind and there was therefore no error of law in the FTT’s decision.