Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT-2023-000031 - [2024] UKUT 00168 (TCC)

Fecha: 13-Mar-2024

Our Analysis

Our Analysis

102.

We reject the Appellant’s submissions. First, the FTT was bound to follow Berry as it was an inferior tribunal. Further, sitting as coordinate judges of the Upper Tribunal, we would only depart from Berry if we considered it to be plainly wrong (see Gilchrist v. Revenue and Customs Commissioners [2014] STC 1713 at [94] referring back to Secretary of State for Justice v B [2010] UKUT 454 (AAC) at [40]). For the reasons that we give below, we are not convinced Berry is plainly wrong, and so we will follow it.

103.

At [31(viii)] of Berry, Lewison J did not assert or indicate that there is a general canon of statutory construction to the effect that if Parliament refers to some commercial concept such as a gain or loss it is likely to mean a real gain or a real loss rather than one that is illusory in the sense of not changing the overall economic position of the parties to a transaction. The sub-paragraph needs to be read within its own context and that of the other sub-paragraphs in [31]. Lewison J prefaces the observation relied on by the Appellant by stating in terms (emphasis added) that “one cannot classify all concepts a priori as “commercial” or “legal””, before going on to invoke the very language of, and expressly cite the very passage of the House of Lords’ decision in BMBF, which makes plain that what Lord Hoffmann said in MacNiven does not reflect a general canon of construction.

104.

In BMBF at [38] (cited in Berry at [31(viii)]) Lord Nicholls states:

“…In the speech of Lord Hoffmann in MacNiven it was said that if a statute laid down requirements by reference to some commercial concept such as gain or loss, it would usually follow that elements inserted into a composite transaction without any commercial purpose could be disregarded, whereas if the requirements of the statute were purely by reference to its legal nature (in MacNiven, the discharge of a debt) then an act having that legal effect would suffice, whatever its commercial purpose may have been. This is not an unreasonable generalisation, indeed perhaps something of a truism, but we do not think that it was intended to provide a substitute for a close analysis of what the statute means. It certainly does not justify the assumption that an answer can be obtained by classifying all concepts a priori as either "commercial" or "legal". That would be the very negation of purposive construction: see Ribeiro PJ in Arrowtown, at paras 37 and 39 and the perceptive judgment of the special commissioners (Theodore Wallace and Julian Ghosh) in Campbell v Inland Revenue Comrs [2004] STC (SCD) 396.” (emphasis added)

105.

As for the UT’s interpretation of the statutory provision before it in Berry, there is nothing impermissible or remiss in Lewison J’s approach; and there is nothing inconsistent between the UT’s approach in Berry and the House of Lord’s position in BMBF (there is no “substitute for a close analysis of what the statute means” (above)) or the Supreme Court’s approach in UBS (it “all depends on the construction of the provision in question” ([65])).

106.

Discussing Berry, in Andrew Judge Greenbank stated (at [83]):