UT (Tax & Chancery) UT-2024-000113 - [2025] UKUT 00165 (TCC)

Statutory comparison aside, we briefly address the Appellant’s broader point that the ratio of Derry SC at [36]-[37] applies equally to ICTA: that the ‘relatively obscure’ Schedule 1B TMA to the Act governing the management of taxes - should not displace the primary taxing statute, ICTA, which imposes liabilities and grants reliefs, particularly when the primary taxing statute provides a code for claiming and calculating relief.

For the reasons set out above, we do not agree that the reasoning in Derry SC means that Schedule 1B TMA applies to ICTA as it does to ITA.

We do of course accept that there is a similar range of loss relief claims available under ICTA and ITA in addition to share loss relief and the corresponding provisions largely mirror each other, but with notable exceptions. We have also noted that there is some reasoning in Derry SC which might apply as much to share loss relief claims under ICTA and ITA. Nonetheless, while the FTT and UT are bound by the ratio in Derry SC in relation to the ITA, they are not so bound in relation to ICTA which was not considered.

The Appellant’s argument in relation to his ability to make the claim in his tax return for 05-06, both before the FTT and in this appeal, is based on an analysis of ICTA as if it was directly considered in Derry SC. However, the Supreme Court in Derry was concerned with a claim made under the successor legislation. Subsequent legislation on the same subject matter may only be relied on as an aid to interpretation where the legal meaning of an enactment is doubtful (see News Corp UK & Ireland Ltd v HMRC [2023] UKSC 7 at [59]). Mr Grierson has not persuaded us that the effect of s.42(11A) and Schedule 1B TMA upon s.574 ICTA is doubtful.

Derry SC, being a decision interpreting ITA, is of little assistance in construing ICTA. The prior legislation was not in issue in that case. As we have explained above, in Derry SC the parties agreed “that the pre-2007 law did not draw any material distinction between share loss relief (s.574 ICTA 1988) and trade and employment loss relief (s380 ICTA 1988)” (see [38]). The decision is itself based on a rejection of the type of “legal archaeology” on which this Appellant’s argument in this case was based in favour of a comparison between the wording of the ITA conferring different types of loss relief (see [35]-[36]). Such a comparison is not required for a case determining whether Schedule 1B applies to a claim which pre-dates the ITA. The decision in Derry SC was informed significantly by the structure of the ITA.

Mr Carey also points out that Lord Hodge’s reasoning in relation to s.132 ITA was influenced by the heading to the section ‘Entitlement to claim’ and at [36] relied in part on the fact that ss.131-133 “walk the taxpayer through the process of giving effect to his entitlement as part of his tax liability for the year specified by him”. S.574 ICTA does not speak of an entitlement to claim the relief in the same manner.

For these reasons, the ratio of Derry SC does not apply to this case. The provisions of s.574(1) ICTA do not displace the express provisions of s.42(11A) TMA and paragraph 2(3), Schedule 1B which apply to share loss relief under that predecessor Act even if not to relief pursuant to s.132 ITA.

Mr Grierson also argued that at [55] of the Decision the FTT misconstrued and misapplied the passage from [38] of the judgment of Lord Carnwath in Derry SCset out in [54] of the Decision. He argued that Lord Carnwath expressly rejected there the approach taken by the FTT at [55] of the Decision, in fact stating the following in relation to the parties’ agreement in Derrythat “the pre-2007 law did not draw any material distinction” between share loss relief and other forms of loss relief: “However, taken at their highest, these indications are far from providing a basis for departing from the ordinary principles of statutory interpretation”. Whatever the appropriate implication, if any, of Lord Carnwath’s observations, this does not affect our analysis for the reasons set out above –Derry SCapplies to ITA, not ICTA.

Mr Grierson also submitted that [56] to [59] of the Decision give inadequate weight to the fact that, following the decision of the Court of Appeal inBlackburn, when Parliament enacted the share loss relief provision in s.132 of ITA, it decided not to include a cross reference to Schedule 1B of TMA, whereas Parliament did include such an express cross reference in the trade loss and employment loss relief provisions of ss.60(2) and 128(7) ITA.

As we have explained, Blackburn did not, in fact, decide what Mr Grierson submits – it was De Silva that determined that Schedule 1B TMA applied to s.380 ICTA and that 2017 Supreme Court decision postdated the introduction of the ITA by ten years. Therefore, this does not support ITA as being intended to replicate the existing position under ICTA in all respects nor that there was a distinction between the application of trade and share loss relief under ICTA with Schedule 1B applying to the former but not the latter.

Mr Grierson also sought to introduce a new argument that Schedule 1B TMA does not apply to s.574 ICTA because s.42(1) TMA states the section applies “unless otherwise provided”. He submitted that s.42 is disapplied wherever a primary taxing statute provides inconsistently with s.42(1), including for a different mechanism for claims involving more than one year. He notes that this point has never been made in any of the arguments in any of the cases that have come before the courts, it has never been considered and some prior authorities were wrongly decided.

We disagree with Mr Grierson’s submission for the reasons given by Mr Carey.

Mr Carey submitted that the reason the point had never been argued or determined in other cases was that it was obviously wrong. The proviso in s.42(1) is not engaged by implication or by inconsistent other statutory provisions – just as paragraph 2(3), Schedule 1B TMA applies even though it provides for an inconsistent outcome to s.574(1)(a) & (b) ICTA. The proviso phrase ‘unless otherwise provided’ in s.42(1) TMA is only engaged if there is express disapplication by a provision within the TMA or other legislation. Mr Carey gave two examples of other provisions by which s.42 TMA has been expressly excluded from applying to that legislation: s.201(5) of the Capital Allowances Act 2001 and reg.12(1) of The Registered Pensions Schemes (Relief at Source) Regulations 2005.

We are satisfied that the proviso phrase ‘unless otherwise provided’ in s.42(1) TMA, requires an express statutory provision that s.42 is to be disapplied. It is not disapplied by implication. S.42(1) provides that s.42(11A), and hence Schedule 1B TMA, is to apply to the Taxes Acts, unless otherwise provided. The general interpretation in s.118 TMA defines the Taxes Act, providing that this is all statutes relating to income tax and capital gains tax:

“tax”, where neither income tax nor capital gains tax nor corporation tax nor development land taxis specified, means any of those taxes .. ,

“the Taxes Acts” means this Act and—

(a)

the Tax Acts ... and

(b)

the Taxation of Chargeable Gains Act 1992 and all other enactments relating to capital gains tax…