Inverclyde Property Renovation LLP & Clackmannanshire Regeneration LLP v The Commissioners For Her Majesty's Revenue & Customs, TC 07223
| Jurisdiction | UK Non-devolved |
| Judge | W Ruthven GEMMELL |
| Judgment Date | 24 June 2019 |
| Neutral Citation | [2019] UKFTT 0408 (TC) |
| Respondent | The Commissioners For Her Majesty's Revenue & Customs |
| Appellant | Inverclyde Property Renovation LLP & Clackmannanshire Regeneration LLP |
| Reference | TC 07223 |
| Court | First-tier Tribunal (Tax Chamber) |
[2019] UKFTT 0408 (TC)
FIRST-TIER TRIBUNAL
TAX CHAMBER
TC07223
Appeal numbers: TC/2017/2838 & 2839
BETWEEN
INVERCLYDE PROPERTY RENOVATION LLP
CLACKMANNANSHIRE REGENERATION LLP
Appellants
-and-
THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
JUDGE RUTHVEN GEMMELL WS
Sitting in public at Edinburgh on 29 and 30 April 2019
Keith Gordon and Ximena Montes Manzano, of Temple Tax Chambers, for the
Appellants
Ross Anderson, Advocate, instructed by the Office of the Advocate General for Scotland,
for the Respondents
2
DECISION
INTRODUCTION
1. Inverclyde Property Renovation LLP (“IPR”) and Clackmannanshire Regeneration LLP
(“CR” and collectively as “the LLPs”) brought, as a preliminary issue, before the Tribunal (“I”
or “me”) an amended ground of appeal namely:–
“In accordance with the earlier decision of the Court of Session in Spring Salmon and
Seafood Limited, Re Petition for Judicial Review [2004] Scot CS, 39 (hereinafter
“SSS”), HMRC had no powers to open an enquiry under TMA 1970, section 12AC and,
therefore, there is no valid notice under section 28B.”
Legislation- see Appendix 1
Case Law – see Appendix 2
2. The LLPs’ Skeleton Argument dated 25 March 2019 stated that an enquiry into the LLPs’
returns should have been made under the provisions of the Finance Act 1998, schedule 18
paragraph 24 (the Corporation Tax Self-assessment Provisions) and if HMRC wanted to
challenge the relevant return of any of the LLPs’ members, they should have opened an enquiry
into those members’ own returns under section 9A of the Taxes Management Act (“TMA”).
3. The LLPs stated that their case did not rely on any lacuna in the legislation but was a
straightforward case of HMRC having followed the wrong procedural course of action and,
furthermore, subject to statutory limits, HMRC might still be able to remedy the situation
through their powers to make discovery assessments.
4. The LLPs contend that as a result of the conclusion which HMRC reached in the course
of their enquiry, both the Notice of Enquiry already issued under section 12AC TMA and the
subsequent Closure Notice issued under section 28B TMA were invalid and the appeals against
the notices should be allowed.
5. HMRC’s Skeleton Argument, dated 10 April 2019, stated that the carrying on by a
Limited Liability Partnership (“llp”) of a business “with a view to profit” is a requirement for
the tax transparent treatment of a llp under section 863 of the Income Tax (Trading and Other
Income) Act 2005 (“ITTOIA”) and that the LLPs’ principal contention on the merits of the
appeal is that they were carrying on business with a view to profit. HMRC’s principal
contention on the merits of the appeal is that none of the LLPs were carrying on business with
a view to profit; the LLPs are thus not to be treated as transparent for tax purposes; and as a
result the LLPs, being bodies corporate for the purposes of section 112A of the Corporation
Tax Act 2010 (hereinafter “CTA”), ought to have made company tax returns.
6. HMRC say that having received a partnership return from the LLPs pursuant to notices
to file, they were entitled to open an enquiry under section 12A TMA and to issue a Closure
Notice under section 28B TMA.
7. At the outset of the hearing it was noted that the issue of whether or not the taxpayers
had been carrying on a business “with a view to profit” had not been established. Had the appeal
followed its original course, that matter could have been decided before considering the purely
legal issue on this the first, and lowest, rung of the legal appeal ladder for UK tax matters.
Accordingly, no assumption could be made for the purposes of this hearing of whether in fact
the LLPs had met the “view to profit” condition or not.
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