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

Mr Grierson submitted that the FTT erred in its conclusion at [61]-[62] of the Decision on the First Share Relief Issue. He argued that the Appellant correctly made his claim under the carry-back provision of s.574(1)(b) of ICTA which permitted relief for a loss of £183,140.43 on the disposal of shares incurred in year 06-07 to be claimed and included in his return for 05-06, the previous year of assessment.

He contended that Derry SC was binding in its application to s.574 ICTA and HMRC could not pray in aid paragraph 2(3), Schedule 1B to TMA 1970 to treat the Appellant’s claim for share loss relief as relating to the later year, namely 06-07 rather than 05-06. There was no direct reference made within s.574 ICTA to s.42 TMA nor to schedule 1B TMA applying.

Mr Grierson argued that the ratio of Derry SC at [36]-[38] applied equally to share loss relief under s.574 ICTA as it did to s.132 ITA: s.574(1)(b) provided its own comprehensive self-contained code both in relation to method and time limit for making claims to share loss relief "by notice given within twelve months from the 31st January next following that year". The procedural and management provisions found in ‘a relatively obscure schedule’ to the TMA could not displace the clear provisions of the primary taxing statute, ICTA, which permitted share loss relief incurred in 06-07 to be claimed in either year 05-06 or 06-07.

He also submitted that the signposts to paragraph 2, Schedule 1B TMA in s.60(2) ITA (on trade loss relief) and s.128(7) ITA (on employment loss relief) are a statutory enactment of [16] of the judgment of the Court of Appeal in Blackburn v. Keeling [2003] EWCA Civ 1221 (“Blackburn”) in relation to s.380 ICTA 1988 which was the provision in ICTA governing both trade loss relief and employment loss relief now found in ss.60 and 128 ITA. However, this is not relevant to the present case where the Appellant properly made his claim for a different type of loss relief, namely share loss relief, in his return for the earlier year, 05-06.

Mr Grierson therefore contended that the fact that Parliament did not include a similar signpost to paragraph 2, Schedule 1B TMA in s.132 ITA (on share loss relief) demonstrates that Parliament considered and intended that Schedule 1B TMA did not apply to its predecessor provision, s 574 ICTA, under which the Appellant made the claim for share loss relief in his 05-06 return.

In summary, he argued that any valid enquiry would have to have been opened under s.9A TMA into the 05-06 return. No such enquiry was opened (it was opened under Schedule 1A TMA as an enquiry into a standalone claim). The consequence of all this was that HMRC’s denial of the relief claimed in the closure notice was not valid. The separate enquiry opened by HMRC under s.9A TMA 1970 into the Appellant’s return for the later year 06-07 was not competent to enquire into the Appellant’s claim under the carry-back provision of paragraph s.574(1)(b) ICTA in his return for the earlier year 05-06; that is because that purported enquiry was not opened in relation to the return in which the claim was made.