UT/2024/000105 - [2025] UKUT 00212 (TCC)

Mr d’Angelin was at all relevant times resident but not domiciled in the United Kingdom, and was taxable on the remittance basis: [8].

The Company was incorporated on 14 December 2016. Mr d’Angelin was appointed its sole director, acquired its single issued share (a single £1 share) and the company began trading at about this time. Its principal activity was as an “advisory boutique offering executive bespoke personal advice and high-end transaction execution services to global corporate clients at the CEO and board of directors level as well as family holdings and fast-growing private companies”: [9].

At all relevant times, Mr d’Angelin was a director, company secretary and sole shareholder of the Company. Mr d’Angelin was the Company’s ‘controlling party’, meaning that the Company was under his control: [10]. Mr d’Angelin was the Company’s sole director until 8 May 2017, when a second director was appointed: [11].

On 6 December 2016, Mr d’Angelin remitted £1.5 million of his foreign income to the United Kingdom: [12]. On 7 December 2016, he received advice in writing from his legal advisors as to BIR, including as to the circumstances in which the relief could be lost: [13]. Also on 7 December 2016, Mr d’Angelin forwarded that advice to his accountants, with instructions that the £1.5 million was a capital subscription and was to be treated as an equity investment in the Company. He asked that the new shares subscribed in the Company be registered in his sole name: [14]. A further ordinary £1 share was issued to him in due course: [15].

For the tax year 2016/2017, Mr d’Angelin claimed BIR under section 809VA in respect of the investment as a ‘qualifying investment’ in the Company, so that the £1.5 million of foreign income was treated as not remitted to the United Kingdom and not taxable: [16].

During the tax year 2017/2018, Mr d’Angelin became increasingly indebted to the Company (the ‘Indebtedness’). As at 28 March 2018, the Indebtedness stood at £71,515: [17]. The Indebtedness reflected the fact that the Company sometimes paid personal expenses on behalf of Mr d’Angelin: [34(12)]. This occurred when Mr d’Angelin used the Company’s credit card or debit card for personal expenditure, with that expenditure then being identified, at some time after the event, by Mr d’Angelin’s assistant and posted to the Company: [34(13)]. The items so posted ranged from a £0.79 monthly subscription to iTunes, through purchases such as flowers for his wife, dry cleaning, taxis, currency for travelling, clothing and books: [34(14)]. The largest individual items debited to the Company were for personal travel: £20,380 on private use of a jet on 15 December 2017; £15,422 on flights and £12,576 on 24 January 2018 on personal travel for him and his family to Dubai: [34(15)].

Mr d’Angelin personally paid Company expenses on behalf of the Company: [34(11)]. These were netted off in the Company’s accounts. Thus, between 5 April 2017 and 28 March 2018, the Company was debited by £75,758 across about 80 transactions and credited with £4,466 across seven payments, leaving the Indebtedness of £71,515 referred to above: [34(16)]. For the period ending 31 December 2017, the Notes to the Company’s Annual Report and Financial Statements, signed by Mr d’Angelin on 20 March 2018, recorded amounts advanced to Mr d'Angelin by the Company of £49,369 and amounts repaid of £11,554, leaving a closing balance of £37,825: [34(17)]. For the period ending 31 December 2018, the Notes to the Company’s Annual Report and Financial Statements, approved by Mr d’Angelin on 26 March 2019, recorded a carried across loan opening balance of £37,285; amounts advanced by the Company of £86,734 and payment by Mr d’Angelin of £67,256, leaving a closing balance of £57,303: [34(18)].

There was no necessity for Mr d’Angelin to transact in this way: at all times, Mr d’Angelin had money in a personal bank account with his wife to pay the personal expenses incurred by the Company and to have paid off the Indebtedness to the Company at any time: [34(20)]. The expectation was that Mr d’Angelin would repay the debt, but the loan account was not paid off in full at any time, and there was never any identifiable pattern of repayment: [34(21)]. The account was operated interest free and repayable on demand: [34(22)].

The Indebtedness to the Company was £223.24 (1 April 2017), £37,825 (31 December 2017), £71,515 (28 March 2018) and £57,303 (31 December 2018): [35].

The Company paid a salary to Mr d’Angelin and declared various dividends over time. It is unnecessary to set these out. They were higher than the Indebtedness owed to the Company by Mr d’Angelin by a significant amount.

On 26 July 2019, HMRC opened an enquiry into Mr d’Angelin’s self-assessment return for 2017/2018: [22]. On 15 June 2022, HMRC issued a Closure Notice: [25]. The Closure Notice concluded that there was a DLA between Mr d’Angelin and the Company and that in relation to that account there had been an omission of employment benefit from Mr d’Angelin’s tax return for 2017/2018 and that there was tax payable in addition of £675,307.35: [5]. This was because there had been an extraction of value from the Company which was not within any statutory exception which caused Mr d’Angelin to lose the BIR previously claimed.