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

The FTT considered at [72]-[74] that it was bound by the decision of Derry CA on the issue of whether a claim is made in a return where a taxpayer includes such a claim in their tax return and intends for it to take effect in their own calculation of tax due.

We are satisfied that the FTT erred in law in deciding it was bound by Derry CA on this issue. According to Al-Mehdawi,a decision of the Court of Appeal is not binding where the Supreme Court in giving the final decision on the case decided the appeal on the first issue and decided that the second issue, on which the Court of Appeal made a decision, did not need to be decided or resolved (as in Derry SC per Lord Carnwath at [68]-[69]). This is notwithstanding the further doubt cast on Derry CA in the obiter comments of Lady Arden in Derry SC at [82]-[83] that the Court of Appeal’s decision on the issue may be wrong and the figures in boxes 15 & 16 of the return for adjustments to tax were not part of the statutory return.

The FTT was not bound by Derry CA and was free to determine the issue of whether the claim to share loss relief was made in the return on the basis of the correct application of Cotter to the facts of this case. In doing so, it would have come to the conclusion set out below.