Upper Tribunal Tax and Chancery Chamber

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

Fecha: 08-Abr-2025

Distinguishing Derry CA

112.

Further and in any event, even if the decision in Derry CA did constitute binding authority, the principle did not apply to this case because it should be distinguished on the facts. The way in which the Appellant’s claim was made in Boxes 18.8 & 23.9 in the return did not bring it within the scope of the principle in Derry CA nor Cotter.

113.

In Derry, the taxpayer performed his own self-assessment of the tax due, taking into account the claim for share loss relief in boxes 15 & 16 headed ‘adjustments to tax due’. This included a re-calculation of the tax chargeable and payable from that which had been automatically calculated by the online system - see [43] & [45] of Derry SC:

43.

He also calculated his own tax and completed the tax calculation summary pages (pages TC1 and 2) in the 2009-10 return as follows. On page TCl (headed “self-assessment”), in Box 1 (“total tax … due before any payments on account”), the figure of £95,546.36 appeared automatically as a result of entries made elsewhere on the form. Page TC2 (headed “adjustments to tax due”) stated –

“You may need to make an adjustment to increase or decrease your tax for 2009-10 because you are ... carrying back to 2009-10 certain losses from 2010-11 ...”

In Box 15 (“Any 2010/11 repayment you are claiming now”) Mr Derry inserted the figure of £165,800; and in Box 16 (“Any other information”) the words:

“The reduction in tax payable in Box 15 of page TC2 relates to the loss carry back claim arising from the carry back of losses of GBP 414,500 as set out on page Ai3. The corresponding reduction in tax payable in the year ended 5 April 2010 following this loss carry back claim is GBP 165,800 being GBP 414,500 at 40%.”

…

45.

The legal effect of these entries is a matter of dispute. In the first place the Revenue do not accept that the personal tax computation is properly to be characterised as “generated by the 2010 Return” (in Henderson LJ’s words). They accept that Mr Derry self-assessed his own tax liability for 2009/10, but their position is that his self-assessed liability was in the sum of (plus) £95,546.36, given in Box 1 on page TC1, not the figure after taking account of loss relief. The reference to the loss relief claim was to be treated as additional information in respect of a

“free-standing credit”…

114.

In Derry, the adjustment to tax figure of £165,800 was taken into account in the self-assessed tax liability – even though HMRC disputed that the loss relief should be taken into account. Thus the facts of Derry and the decision of Derry CA can be distinguished on the facts from this case, where the Appellant referred to a claim in boxes 18.8 (“tax you are reclaiming now”) and 23.9 (“other information”) on his return but that claim was not taken into account in the calculation of the self-assessment, either by the automated system or manually by the taxpayer stating a different calculation.

115.

In the present case, the Appellant made a claim for an amount of loss relief in box 18.8 as explained in box 23.9, the white space, on his return for the tax year 2005-06. Although the Appellant may have been seeking to reduce his liability for that year, the claim was not in fact taken into account in the Appellant’s calculation of the tax chargeable and payable for that year. As the FTT found at [72]: “The amount of the claim is not reflected in the calculation of the tax due for 2005/06 because the box in the return was populated automatically.” The information in the electronic form did not and could never have affected the self-assessment calculation and it was a choice to use the online system rather than a paper return.

116.

The Appellant therefore did not ‘force’ a claim into the tax return which he was not permitted to make, such as by adjusting figures in boxes of the return that would automatically affect the tax calculation. The tax calculation in the electronic return was restricted in the manner contemplated by Lady Arden in Derry SC at [80]:

80.

Again provisionally, there is no reason as it seems to me why the online form should not preclude an adjustment which would produce a result which was incompatible with the Taxes Acts. The objective in designing a tax return form, including an online form, is to help the taxpayer file a tax return which properly shows his liability, no more and no less. Indeed, Lord Hodge in Cotter specifically envisaged that HMRC could take steps to prevent a taxpayer making claims in the online form which he was not entitled to make: see para 24 set out by Lord Carnwath at para 51 above.

117.

Therefore, we are of the view that the obiter comments outlined in [27] of Cotter are limited to the situation in which a taxpayer has brought an incorrect claim into the calculation of tax due for that year. This is not possible where the Appellant is prevented, by the programming and setup of the online tax return form from taking a claim which he is not entitled to make in that return into account in the calculation of the tax due for that year. There is no injustice to the taxpayer in this regard, the claim for relief will be made and processed, even if it is claimed in the wrong year, it is just that it will not be treated as a claim made in the return if it is enquired into.

118.

We are therefore satisfied that the FTT erred in law in its conclusion at [74]. We allow HMRC’s cross-appeal on this ground and its decision on the Second Share Loss Relief Issue should be set aside and remade.