Halstead
| Jurisdiction | UK Non-devolved |
| Judgment Date | 27 September 2023 |
| Neutral Citation | [2023] UKFTT 871 (TC) |
| Court | First-tier Tribunal (Tax Chamber) |
[2023] UKFTT 871 (TC)
Tribunal Judge Anne Scott
First-Tier Tribunal (Tax Chamber)
Stamp duty land tax (SDLT) – Claim for relief in respect of two properties by member of visiting US armed forces – FA 1960, s. 74A – Claim not made in returns or amended returns – Strike-out application in respect of first property – Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r 8(2) – overpayment relief claim out of time and no appealable decision – Application granted as no jurisdiction – Strike-out application in respect of second property – SI 2009/273, r 8(3)(c) – No reasonable prospect of success – FA 2003, Sch. 10, para. 34A(2)(b) – Application granted – Appeals in respect of both properties struck out.
In Halstead [2023] TC 08948, the First-tier Tribunal struck out appeals for relief from SDLT on two property purchases made by a member of US visiting forces by way of letter and not by way of a return or amended return. The appeal in respect of the first property was struck out for want of jurisdiction as an overpayment claim would have been out of time and there had been no appealable decision. The appeal in respect of the second property was struck out as the overpayment claim would have no reasonable prospect of success.
The appellant, Mr Halstead, had been a member of US visiting forces stationed in the UK since 2015. He and his wife purchased their first property in February 2016 and their second in May 2018, paying SDLT at the appropriate rates and making no claim for relief in either return.
In October 2021, Mr Halstead wrote the first of a series of memoranda to HMRC, in which he claimed a full refund of tax on both properties and asked for the memorandum to be treated as a request to amend both returns. His claim rested essentially on FA 1960, s. 74 (later corrected to FA 1960, s. 74A, as the former section had been repealed in 2012), the latter of which provides exemption from SDLT for, inter alia, a land transaction for the purpose of promoting the health or efficiency of a visiting force.
HMRC responded by pointing out that s. 74A required claims for relief by way of a return or amended return, the time limit for which had expired in respect of both properties. Further correspondence followed. HMRC indicated that it was prepared to accept his memoranda as claims for overpayment relief under FA 2003, Sch. 10, para. 34. In respect of the first property, however, such a claim, for which the time limit was four years from the effective date of the transaction, was out of time. In respect of the second property, it was in time, and HMRC opened an enquiry into the claim, which concluded that HMRC was entitled under Case A of Sch. 10, para. 34A to refuse the claim as it arose from failure to make a claim in the prescribed manner. It maintained that FA 1960, s. 74A afforded relief to visiting forces only and not to transactions by individual members of those forces.
Mr Halstead continued to claim relief on the grounds that HMRC had improperly levied tax on him as a foreign entity contrary to international agreements as well as domestic UK law. He insisted that FA 1960, s. 74A applied to members of visiting forces purchasing property for their health, wellbeing and efficiency, and also cited in his support the 1951 NATO Status of Forces Agreement and FA 2003, Sch. 10, para. 7 (HMRC’s power to correct returns), among others.
Following Mr Halstead’s appeal to the Tribunal. HMRC applied for the appeal in respect of the first property to be struck out under r. 8(2) of the Tribunal rules for want of jurisdiction. The overpayment claim was out of time and HMRC had not opened an enquiry into it. There was thus no appealable decision.
HMRC also applied for the appeal in respect of the second property to be struck out under r. 8(3)(c) as having no reasonable prospect of success.
The Tribunal’s decision
The exemption from SDLT under FA 1960, s. 74A did not extend to individual members of visiting forces and never had done.
The NATO Status of Forces Agreement antedated FA 1960, s. 74A and was uncontentious. Article X of that Agreement, to which Mr Halstead had referred, covered taxation dependent on residence or domicile. SDLT was predicated on neither.
Mr Halstead had self-assessed and paid SDLT correctly, so there was no question of any relief. That alone would have disposed of the matter, but the Tribunal judge went on to look at the other issues raised.
With respect to the first property, the Tribunal only had jurisdiction in relation to appealable decisions. The grounds of appeal were limited to those in FA 2003, Sch. 10, para. 35, of which only one could be relevant in this case, viz. against a conclusion stated or amendment made by a closure notice. There had been no closure notice as there had not been an enquiry.
As for the scope for a correction under Sch. 10, para. 7, the wording was permissive and not mandatory. It was in any case intended to allow HMRC to amend a return unilaterally where there had been an obvious error or omission. There was nothing on the face of the return to suggest an obvious error. Furthermore, the nine-month deadline for making such a correction had long since passed.
Finally, a claim for overpayment relief had not been made within the prescribed four-year limit.
HMRC’s application to strike out the appeal in respect of the first property would thus be granted.
With respect to the second property, whereas the overpayment claim had been made in time, HMRC could refuse it under Case A. The Tribunal agreed with the judge in Smith Homes 9 Ltd and Secure Service Ltd that failure to make a claim in a return fell within Case A. In the terms of r 8(3)(c) therefore, there was no reasonable prospect of success. This appeal also would be struck out.
Another case emphasising that making a claim for overpayment relief where the overpayment arose out of the taxpayer’s failure to make the original claim for relief in the manner and time prescribed will not succeed. See also L-L-O Contracting Ltd. Made intriguing, however, by the taxpayer’s insistence that as he was a member of a visiting allied force, it was tantamount to lèse-majesté for HMRC to subject him to SDLT.
Comment by Zigurds G Kronbergs, Senior Tax Writer, Croner-i Ltd.
C Brandon Halstead appeared for the appellant
Harry Winter, of Counsel instructed by the General Counsel and Solicitor to HM Revenue and Customs appeared for the respondents
[1] On 19 January 2023, the respondents (“HMRC”) made an application for strike out of Mr Halstead's appeal pursuant to rules 8(2) and 8(3)(c) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (as amended) (“the Rules”). I annex a copy of those Rules at Appendix 1.
[2] On 12 September 2022, Mr Halstead had filed an appeal online seeking repayment of Stamp Duty Land Tax (“SDLT”) in a total of £20,300. He and his wife had purchased a property in 2016 (“the First Property”) and another property in 2018 (“the Second Property”). They had paid SDLT of £7,500 and £12,800 respectively. In summary, he argued that the SDLT had been “improperly charged” and he sought repayment on the basis that he had “tax-exempt status as a member of the US Visiting Forces”.
[3] I had the benefit of a hearing bundle extending to 524 pages which included the strike-out application upon which HMRC relied as a Skeleton Argument.
[4] With the consent of the parties, the hearing was conducted by video link using the Tribunal's video hearing system. Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.
[5] I set out the facts, including the history of the arguments deployed, at length since, from the outset, Mr Halstead had made it explicit that he wished this appeal to be escalated to the highest level.
[6] The primary function of the Tribunal is to find the facts and then to apply the law. Although I refer to the law in the body of this decision, at Appendix 2, I annex the text of the legislative and other provisions that are relevant to the arguments advanced in this matter.
[7] The Tribunal is a creature of statute law and its jurisdiction is circumscribed by that law. In relation to strike-out applications, that jurisdiction is found in rule 8 of the Rules. If the Tribunal lacks jurisdiction, in terms of rule 8(2) it must strike out the proceedings. That is a binary decision, which the Tribunal must address and determine at the hearing of the strike-out application.
[8] In this appeal, HMRC seek strike out of the appeal in relation to the First Property in terms of rule 8(2).
[9] This is to be contrasted with an application to strike out a claim, or part of it, on the grounds that it has no reasonable prospect of success. In the latter case, the Tribunal will not exercise its discretion to strike out if there is a non-fanciful argument in support of the claim, or relevant part.
[10] HMRC seek strike out of the appeal in terms of rule 8(2) of the Rules in respect of the First Property on the basis that the Tribunal has no jurisdiction. HMRC also seeks strike out of the appeals for both properties in terms of rule 8(3)(c) of the Rules.
[11] Mr Winter argued that the leading case giving guidance on rule 8(3)(c) is R & C Commrs v Fairford Group plc (in liquidation)[2014] BVC 529 (“Fairford”) where the Tribunal found at paragraph 41 that:–
In our judgment an application to strike out in the FTT under r 8(3)(c) should be considered in a similar way to an application under CPR 3.4 in civil proceedings (whilst recognising that there is no equivalent jurisdiction in the FTT Rules to summary judgment under Pt 24). The tribunal must consider whether there is a...
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