The Commissioners for Her Majesty's Revenue and Customs v Nicholas MF Trigg
| Jurisdiction | UK Non-devolved |
| Judgment Date | 20 October 2014 |
| Neutral Citation | [2016] UKUT 0165 (TCC) |
| Appellant | |
| Respondent | Malcolm Gammie QC, instructed by Herbert Smith Freehills LLP, for the |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/25/2015 |
[2016] UKUT 0165 (TCC)
Appeal number: FTC/25/2015
CAPITAL GAINS TAX – qualifying corporate bonds (QCBs) – whether
provisions in bond instruments for redenomination of sterling bonds to
euros (or another currency) on adoption by the UK of the euro (or other
currency) as its lawful currency prevented the bonds from being QCBs –
TCGA 1992, s 117(1)(b) and s 117(2)(b)
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Appellants
- and -
NICHOLAS M F TRIGG
(a partner of TONNANT LLP)
Respondent
TRIBUNAL:
MRS JUSTICE ASPLIN
JUDGE ROGER BERNER
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London EC4 on 7 and 8 March 2016
Akash Nawbatt, instructed by the General Counsel and Solicitor to HM Revenue
and Customs, for the Appellants
Malcolm Gammie QC, instructed by Herbert Smith Freehills LLP, for the
Respondent
© CROWN COPYRIGHT 2016
DECISION
1. This is an appeal by the Commissioners for Her Majesty’s Revenue and
Customs (“HMRC”) from the decision of the First-tier Tribunal (Judge Barbara 5 Mosedale) (the “FTT”) released on 20 October 2014 (the “FTT Decision”). The FTT
Decision was made pursuant to a joint reference to the FTT under section 28ZA of the
Taxes Management Act 1970 by HMRC and Mr Nicholas Trigg, a partner in Tonnant
LLP (“Mr Trigg”). A number of references were lodged in the FTT by other partners
in Tonnant LLP. Pursuant to Rule 18 of the Tribunal Procedure (First-tier Tribunal) 10 (Tax Chamber) Rules 2009, Mr Trigg’s appeal became the lead appeal before the
FTT.
2. The issue with which the joint reference was concerned is a short one. It is
whether certain corporate bonds (the “Bonds”) purchased by Mr Trigg qualify under
an exemption from capital gains tax for “qualifying corporate bonds” (“QCBs”). The 15 terms of the joint reference (the “Reference”) were:
“Does the inclusion in the Bonds (at the time of their issue) of a clause
in the form set out in Schedule A or B to this Joint Reference prevent
the Bonds from being qualifying corporate bonds by virtue of section
117(1)(b) of the Taxation of Chargeable Gains Act 1992?” 20
3. The exemption from CGT for QCBs is contained in s 115 of the Taxation of
Chargeable Gains Act 1992 (“TCGA”). Although simple debts fall outside the scope
of CGT (s 251 TCGA), as a general matter debts on a security, such as the Bonds, are
chargeable assets unless the exemption in s 115 applies. That exemption depends
upon the securities coming within the definition of a “qualifying corporate bond” in s 25 117 TCGA which materially provides as follows:
“117 Meaning of ‘qualifying corporate bond’
(A1) … for purposes other than those of corporation tax references to a
qualifying corporate bond shall be construed in accordance with the
following provisions of this section. 30
(1) For the purposes of this section, a ‘corporate bond’ is a security, as
defined in section 132(3)(b) –
(a) the debt on which represents and has at all times represented a
normal commercial loan; and
(b) which is expressed in sterling and in respect of which no 35 provision is made for conversion into, or redemption in, a currency
other than sterling,
and in paragraph (a) above ‘normal commercial loan’ has the meaning
which would be given by section 162 CTA 2010 if for paragraphs (a)
to (c) of subsection (2) of that section there were substituted the words 40 ‘corporate bonds (within the meaning of section 117 of TCGA 1992)’
(2) For the purposes of subsection (1)(b) above –
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