Christian Peter Candy v The Commissioners for HM Revenue & Customs
| Jurisdiction | England & Wales |
| Judge | Lady Justice Simler,Arnold LJ,Nugee LJ |
| Judgment Date | 03 November 2022 |
| Neutral Citation | [2022] EWCA Civ 1447 |
| Docket Number | Case No: CA/2021/000120 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 1447
Lady Justice Simler
Lord Justice Arnold
and
Lord Justice Nugee
Case No: CA/2021/000120
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM UPPER TRIBUNAL
Mr Justice Mellor and Judge Andrew Scott
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael Thomas and Quinlan Windle (instructed by Joelson LLP) for the Appellant
Imran Afzal (instructed by General Counsel and Solicitor for HMRC) for the Respondents
Hearing date: 12 October 2022
Approved Judgment
This judgment was handed down remotely at 10.30am on Thursday 3 November 2022 by circulation to the parties or their representatives by e-mail and by release to the National Archives
Introduction
This appeal by Christian Candy, the taxpayer, is brought with the permission of the Upper Tribunal. It raises a short question of statutory construction concerning the interaction of section 44(9) and paragraph 6(3) of Schedule 10 to the Finance Act 2003 (“the FA 2003”) and whether a claim for repayment of stamp duty land tax (“SDLT”) made by amendment on 14 April 2014, to a return filed on 8 October 2012, was made in time.
The repayment claim was made in circumstances where there was an initial liability to SDLT (in the sum of £1,920,000) triggered by substantial performance of a contracted-out lease. This liability was declared in his return and paid by the taxpayer. The contract was subsequently (by novation in favour of Nicholas Candy, the taxpayer's brother) “rescinded or annulled, or for any other reason not carried into effect” after the expiry of the normal 12 month time limit for amending the return. The question in those circumstances is whether the claim for repayment of the SDLT had to be made within the normal 12 month time limit nonetheless, or whether it could be made at any time after the initial substantial performance of the contract was not carried into effect, however long a period that was.
His Majesty's Revenue and Customs (“HMRC”) rejected the taxpayer's claim for repayment on the basis (among others) that the amendment of the return was made out of time. The taxpayer appealed.
Judge Nicholas Aleksander sitting in the First-tier Tribunal, (“the FTT”), held that the claim for repayment under section 44(9) could be made at any time and was not therefore out of time. The Upper Tribunal, Mellor J and Judge Andrew Scott (“the UT”), reversed that decision, holding that the taxpayer's claim for repayment was not made within the 12 month period for amendment provided for by Schedule 10, paragraph 6(3) FA 2003 and was accordingly out of time. Since there is no discretion afforded by the statutory scheme to extend time, that meant the claim for repayment failed.
On this appeal, Michael Thomas, who acts on behalf of the taxpayer as he did below, contended that the FTT was correct: the time limit of 12 months in paragraph 6(3) applies “except as otherwise provided” and on a proper reading of section 44(9), it makes alternative provision by expressly providing that a repayment can be claimed where, at any later time after the initial substantial performance, the contract is not carried into effect. In other words, the claim for repayment is not subject to the normal 12 month time limit, or indeed any time limit, in these circumstances. This is consistent with the literal reading of the clause and the purpose of section 44(9). It mitigates potential unfairness where unforeseen circumstances outside the parties' control lead to a contract for a land transaction going off, wholly or partly, after the 12 month time limit has elapsed. Mr Thomas conceded that the UT's construction is tenable; but submitted that the taxpayer's construction is better.
For HMRC, Imran Afzal contended that the taxpayer's interpretation of the legislation is untenable. SDLT, in common with other self-assessed tax, has hard-edged deadlines which are unambiguously expressed. In the present case, the obligation was on the taxpayer to complete a return containing a self-assessment within a specified period. The return was itself subject to Schedule 10 FA 2003 which makes provision for amending a return within a time limited period and for opening an enquiry within a further specified period. The imposition on the taxpayer of a hard-edged time limit to amend a return in Schedule 10, paragraph 6(3) sits alongside and is counter balanced by the imposition of a hard-edged time limit on HMRC for opening an enquiry. In short, the statute requires an amended return to be filed within 12 months, and section 44(9) FA 2003 cannot be read as making alternative provision.
The statutory scheme
SDLT was introduced by Part 4 FA 2003 to replace stamp duty charged under the predecessor legislation, which was abolished. It is a self-assessed charge on land transactions (section 42(1) FA 2003). The statute defines land transactions as the acquisition of a chargeable interest (section 43(1)), defined to include “an estate, interest, right or power in or over land” other than an exempt interest (section 48(1) FA 2003). The charge arises whether or not the acquisition is documented in a way that brings about formal completion or documented or evidenced in writing at all (section 42(2) FA 2003).
Section 44 FA 2003 identifies the distinction between contract and conveyance in a land transaction and makes provision as to which transaction counts for SDLT purposes. In general, the section treats contract and completion by conveyance as part of a single transaction, and the date of completion is the effective date of the land transaction (subsection (3)). However, special rules apply where a contract is “substantially performed” without having been completed. Thus, at times material to the land transaction in this case, section 44 provided:
“44 Contract and conveyance
(1) This section applies where a contract for a land transaction is entered into under which the transaction is to be completed by a conveyance.
(2) A person is not regarded as entering into a land transaction by reason of entering into the contract, but following provisions have effect.
(3) If the transaction is completed without previously having been substantially performed, the contract and the transaction effected on completion are treated as parts of a single land transaction.
In this case the effective date of the transaction is the date of completion.
(4) If the contract is substantially performed without having been completed, the contract is treated as if it were itself the transaction provided for in the contract.
In this case the effective date of the transaction is when the contract is substantially performed.
(5) A contract is “substantially performed” when –
(a) the purchaser, or a person connected with the purchaser, takes possession of the whole, or substantially the whole, of the subject-matter of the contract, or
(b) a substantial amount of the consideration is paid or provided.
(6) For the purposes of subsection (5)(a) –
(a) possession includes receipt of rents and profits or the right to receive them, and
(b) it is immaterial whether possession is taken under the contract or under a licence or lease of a temporary character.
(7) For the purposes of subsection (5)(b) a substantial amount of the consideration is paid or provided –
(a) if none of the consideration is rent, where the whole or substantially the whole of the consideration is paid or provided;
(b) if the only consideration is rent, when the first payment of rent is made;
(c) if the consideration includes both rent and other consideration, when –
(i) the whole or substantially the whole of the consideration other than rent is paid or provided, or
(ii) the first payment of rent is made.
(8) Where subsection (4) applies and the contract is subsequently completed by a conveyance –
(a) both the contract and the transaction effected on completion are notifiable transactions, and
(b) tax is chargeable on the latter transaction to the extent (if any) that the amount of tax chargeable on it is greater than the amount of tax chargeable on the contract.
(9) Where subsection (4) applies and the contract is (to any extent) afterwards rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of that subsection shall (to that extent) be repaid by the Inland Revenue.
Repayment must be claimed by amendment of the land transaction return made in respect of the contract.
(9A) Where –
(a) paragraph 12A of Schedule 17A applies (agreement for lease), or
(b) …
it applies in place of subsections (4), (8) and (9).
(10) In this section –
(a) references to completion are to completion of the land transaction proposed, between the same parties, in substantial conformity with the contract; and
(b) “contract” includes any agreement and “conveyance” includes any instrument.
(11) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this section.”
Section 76 FA 2003 deals with the requirement to deliver a land transaction return to HMRC before the end of the period of 30 days after the effective date of the transaction. It provides that the land transaction return must include a self-assessment of the SDLT that, on the basis of the information contained in the return, is chargeable on the transaction:
“76 Duty to deliver land transaction return
(1) In the case of every notifiable transaction the purchaser must deliver a return (a “land transaction return”) to the Inland Revenue before the end of the period of 30 days after the effective date of the transaction.
(2) The Inland Revenue may be regulations amend subsection (1) so as to require a land transaction return to be delivered before the end of such shorter period after the...
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