[2025] UKUT 00278 (TCC)

The issue of whether the claimants provided “reasonable disclosure” as defined in s. 20(5) of the Finance Act 2020 arises in respect of repayment claim amounts that are referable to loans and quasi-loans made on or after 9 December 2010, where HMRC did not have “power to recover”, but nevertheless refused repayment on the basis that the reasonable disclosure condition was not satisfied. The relevant years are 2011/12 for Fluid Scotland and 2011/12, 2012/13 and 2013/14 for Airedale.

HMRC’s submission, in summary, is that the definition of reasonable disclosure set out in s. 20(5) of the Finance Act 2020 requires disclosure of the amount, parties and date of the loan or quasi-loan, as well as the material steps in the loan or quasi-loan transaction, and any other information necessary to establish a reasonable case that income tax or NICs are payable in relation to the transaction. HMRC contends that this information must be clearly identifiable from the relevant tax returns, and it is not sufficient that information regarding the nature of a particular tax scheme has been provided (separately) to HMRC by the promoters of that scheme under the DOTAS regime, on form AAGs.

The claimants dispute HMRC’s interpretation, contending that it goes beyond the requirements of s. 20(5). Their submission was that it is sufficient that the information set out in s. 20(5) is ascertainable from the relevant tax returns read in context and (Mr Goodfellow submitted) together with the further information provided by the scheme promoters on form AAGs. The claimants emphasised that this did not require every detail of the arrangements to be set out.

Mr Goodfellow also argued (for Fluid Scotland) that Ms Robinson’s approach to concluding that there had been no reasonable disclosure was flawed, because she had applied too high a test when considering whether, under s. 20(5)(d), a reasonable case could be made that the relevant amount was payable to HMRC. By contrast, in relation to Airedale,Mr Mullan did not pursue an argument that Ms Fletcher had applied the wrong test in her review decision. He (sensibly, in our view) acknowledged that if the Tribunal did not agree with him on the statutory interpretation of the provisions and their application to Airedale’s disclosures, any error in Ms Fletcher’s approach would not alter the outcome.

As with the power to recover condition, we start by addressing the interpretation of the reasonable disclosure condition, before considering HMRC’s application of that condition to the facts of the claims.