Albert House Property Finance PCC Ltd ((in Liquidation)) and Another
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 December 2019 |
| Neutral Citation | [2019] UKFTT 732 (TC) |
| Date | 03 December 2019 |
| Court | First Tier Tribunal (Tax Chamber) |
[2019] UKFTT 732 (TC)
Judge Anne Redston
Mr Julian Hickey of Counsel, instructed by Cornerstone Tax, appeared for the appellants
Mr Ben Elliott of Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the respondents
Stamp duty land tax (SDLT) – Procedure for withdrawal of appeals – FA 2003, Sch. 10, para. 37 – Objection by HMRC to notice of withdrawal not sent directly to appellants but appellants aware – Whether notice of objection nevertheless validly given – Yes – Appeals therefore not withdrawn.
the First-Tier Tribunal (“FTT”) held on a purposeful construction that a notice of objection by HMRC was validly given even though it had not been given directly to the appellants as required by FA 2003, Sch. 10, para. 37(4).
The appellants were two companies that had participated in tax-avoidance schemes in which they acted as vendors for a purchaser to whom they leased the property back under a purported alternative-finance arrangement. The schemes were substantially similar to those in Project Blue v R & C Commrs [2018] BTC 23 (“Project Blue”).
In the two transactions concerned, HMRC raised assessments in the alternative on both the appellants and their respective purchasers, because prior to the decision of the Supreme Court in Project Blue, it was uncertain which party in such an arrangement would be ultimately liable to tax.
In both transactions, the respective appellant, having first given notice of appeal against the assessment on it, subsequently gave notice under FA 2003, Sch. 10, para. 37(4)(a) that it wished to withdraw its appeal. Having been informed of this by the Tribunal, HMRC notified the Tribunal (but not the appellants) that it objected to the withdrawal, within the time permitted by FA 2003, Sch. 10, para. 37(4)(b). At a subsequent date before the hearing, both companies went into liquidation. The respective purchasers in the two transactions did not withdraw their appeals, which remain pending.
The issue in the present case was whether HMRC's failure to notify the appellants themselves in writing, as required by FA 2003, Sch. 10, para. 37(4)(b), invalidated its objection and thereby let the assessments on the appellants stand, which would be the consequence under FA 2003, Sch. 10, para. 37.
According to the FTT, it was “well established that all statutory provisions … [had to] be construed purposively”. On the basis of the non-binding authorities cited in aid by counsel for HMRC, all of which concerned notices of enquiry, what mattered was the reality of the situation, not compliance with some formal requirement. From the perspective of the appellants, they were aware of HMRC's objection, as it had been communicated to them by the Tribunal.
In the view of the FTT, there was a valid parallel in the present case with enquiry notices. On the facts of the case, it was clear that HMRC had objected and the appellants had been told of that objection within the time limit. HMRC's notices of objection were therefore valid and the appeals consequently remained open and to be determined.
The reason why the appellants wished to withdraw the appeals was presumably, as HMRC surmised, that, being in liquidation, they would not have the funds to settle the liability, and HMRC would have no recourse to the purchasers, as the assessments on them would fall.
If the courts will indeed construe statutory provisions requiring taxpayers to be notified directly in such circumstances across the whole gamut of taxes to be satisfied where notice is given only indirectly, those provisions become otiose.
[1] This case is brought by Albert House Property Finance Protected Cell Company Limited (“Albert House”) and Vale Property Finance Protected Cell Company Limited (“Vale”), together “the Appellants”. The Appellants are in liquidation, but I was informed by Mr Hickey at the beginning of the hearing that the liquidators had agreed to the Appellants participating in these proceedings and were content that the case proceed in their absence.
[2] Both Appellants had participated in tax planning arrangements (“the Arrangements”) with the aim of avoiding Stamp Duty Land Tax (“SDLT”). The relevant SDLT legislation is in Finance Act 2003. In this Decision Notice, all references to legislation are to that Act, unless otherwise specified, and all legislative provisions are cited only so far as relevant to the issues raised by the appeal.
[3] Each of the Arrangements involved one of the Appellants and a purchaser who was seeking to avoid SDLT. HM Revenue & Customs (“HMRC”) decided that the Arrangements did not succeed, and assessed the Appellants and the purchasers in the alternative to the SDLT that would have been due had they not entered into the Arrangements.
[4] On 22 December 2015, Albert House notified an appeal to the Tribunal against an assessment issued under Sch 10, para 28 (a “discovery” assessment), and on 15 November 2016, Vale notified two appeals to the Tribunal, one against a closure notice issued under Sch 10, para 23, and one against a discovery assessment.
[5] In February 2018, the Appellants wrote to HMRC withdrawing their appeals; they copied the Tribunal. The Tribunal informed HMRC within 30 days of that notification, and HMRC wrote to the Tribunal, objecting to the withdrawals, but did not write to the Appellants.
[6] Sch 10, para 37(4) states that a withdrawal is treated as if the parties have agreed that the decision under appeal should be upheld without variation. However, that deemed agreement only takes effect if HMRC “do not, within 30 days after that notification, give the appellant notice in writing indicating that they are unwilling that the appeal should be withdrawn”.
[7] The Appellants' case was that their withdrawals were effective in creating those deemed agreements, because HMRC had failed to give them notice in writing within 30 days. HMRC's case was that the legislation did not require an objection to be delivered directly to the Appellants; indirect communication was sufficient. The reasons HMRC did not want the Appellants to withdraw their appeals are explained at paragraphs 78–80.
[8] On 13 September 2018, Judge Poole directed a preliminary hearing to decide whether the withdrawals were effective in creating deemed agreements.
[9] For the reasons explained in the main body of this decision, I decided that HMRC's objections, which had been communicated in writing to the Appellants within the specified 30 day period, had satisfied the relevant statutory provisions, and that the withdrawals had therefore not been effective in bringing the Appellants' appeals to an end. The ongoing case management of their appeals is considered at the end of this Decision.
[10] The Appellants are in liquidation, but as already noted, I was informed by Mr Hickey at the beginning of the hearing that the liquidators had agreed to the Appellants participating in these proceedings and were content that the case proceed in their absence.
[11] I considered rules 2 and 33 of the Tribunal (First-tier Tribunal) (Tax Chamber) Rules 2009. The liquidators were aware of the hearing and I decided it was in the interests of justice to proceed.
[12] The main provision with which this appeal was concerned is at Sch 10, para 37. It is headed “settling appeals by agreement” and reads:
(1) If, before an appeal under paragraph 35 is determined, the appellant and the Inland Revenue agree that the decision appealed against
- should be upheld without variation,
- should be varied in a particular manner, or
- should be discharged or cancelled,
the same consequences shall follow, for all purposes, as would have followed if, at the time the agreement was come to, the tribunal had determined the appeal and had upheld the decision without variation, varied it in that manner or discharged or cancelled it, as the case may be.
(2) Sub-paragraph (1) does not apply if, within 30 days from the date when the agreement was come to, the appellant gives notice in writing to the Inland Revenue that he wishes to withdraw from the agreement.
(3) Where the agreement is not in writing
- sub-paragraphs (1) and (2) do not apply unless the fact that an agreement was come to, and the terms agreed, are confirmed by notice in writing given by the Inland Revenue to the appellant or by the appellant to the Inland Revenue, and
- the references in those provisions to the time when the agreement was come to shall be read as references to the time when the notice of confirmation was given.
(4) Where
- the appellant notifies the Inland Revenue, orally or in writing, that he does not wish to proceed with the appeal, and
- the Inland Revenue do not, within 30 days after that notification, give the appellant notice in writing indicating that they are unwilling that the appeal should be withdrawn,
the provisions of sub-paragraphs (1) to (3) have effect as if, at the date of the appellant's notification, the appellant and the Inland Revenue had come to an agreement (orally or in writing, as the case may be) that the decision under appeal should be upheld without variation.
(5) References in this paragraph to an agreement being come to with an appellant, and to the giving of notice or notification by or to the appellant, include references to an agreement being come to, or notice or notification being given by or to, a person acting on behalf of the appellant in relation to the appeal.
[13] Rule 17 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the Tribunal Rules”) is headed “withdrawal” and reads:
(1) Subject to any provision in an enactment relating to withdrawal or settlement of particular proceedings, a party may give notice to the Tribunal of the withdrawal of the case made by it in the Tribunal...
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Marano
...as we noted in the hearing, Judge Redston recently considered a similar issue in Albert House Property Finance PCC Ltd (in liquidation) [2020] TC 07490. HMRC's counsel, Mr Ben Elliott, set out an analysis of the case law which Judge Redston accepted and followed. One of the principles deriv......
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Albert House Property Finance PCC Ltd ((in Liquidation)) and Another
...Finance Protected Cell Company Limited (“Vale”) (“the First Hearing”). The decision was issued on 3 December 2019 under reference [2020] TC 07490 (“the First Decision”). Background [2] The Appellants participated in tax planning arrangements (“the Arrangements”) marketed by Cornerstone Tax ......