The Queen (on the application of James Ironmonger Derry) v HMRC
| Jurisdiction | UK Non-devolved |
| Judge | MR JUSTICE MORGAN |
| Judgment Date | 28 July 2015 |
| Neutral Citation | [2015] UKUT 0416 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | JR/08/14 |
[2015] UKUT 0416 (TCC)
TCC JR/08/14
Application for judicial review – self-assessment in annual return – claim
to relief under Chapter 6 of Part 4 of Income Tax Act 2007 (dealing with share
loss relief) – whether such a claim governed by section 42(11A) of, and
Schedule 1B, to Taxes Management Act 1970 – whether any enquiry into claim
should be under section 9A or under Schedule 1A of Taxes Management Act
2007- whether claim given effect within paragraph 4 of Schedule 1A to Taxes
Management Act 1970 – whether judicial review appropriate procedure
IN THE UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
Between :
THE QUEEN (ON THE APPLICATION OF JAMES IRONMONGER DERRY)
Claimant
- AND -
COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Defendants
TRIBUNAL: MR JUSTICE MORGAN
Sitting in public at Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A
1NL on 30 and 31 March and 1 April 2015
Ms Hui Ling McCarthy (instructed by UHY Hacker Young LLP, accountants) for the
Claimant
Mr Scott Redpath (instructed by General Counsel and Solicitor for HM Revenue and
Customs) for the Defendants
© CROWN COPYRIGHT 2015
Page 2
DECISION
RELEASE DATE: 28 July 2015
Tribunal Judge: Mr Justice Morgan:
Introduction
1. This is a claim by a taxpayer, Mr Derry, for judicial review of a demand for
tax made on him by Her Majesty’s Revenue and Customs (“HMRC”). The
claim was issued in the Administrative Court of the Queen’s Bench Division
where Mr Derry was given permission to seek judicial review and the claim
was then transferred to the Upper Tribunal (Tax and Chancery Chamber).
2. Ms McCarthy appeared on behalf of Mr Derry and Mr Redpath appeared on
behalf of HMRC.
The facts in outline
3. In the tax year 2009-2010, Mr Derry had an income of £519,625 or
thereabouts, which was liable to tax.
4. Mr Derry says that on 22 March 2010, he purchased 500,000 shares at a cost
of £500,000 in a company called Media Pro Four Limited, which he says was
a qualifying company for the purposes of section 131 of the Income Tax Act
2007 (“ITA”). Mr Derry says that on 4 November 2010, he sold those shares
for £85,500 resulting in a capital loss to him of £414,500. That loss was in the
tax year 2010-2011.
5. Mr Derry says that he is entitled to claim relief for his capital loss and, in
particular, he is entitled to claim such relief against his taxable income in the
tax year 2009-2010. He says that he is entitled so to claim pursuant to Chapter
6 of Part 4 of ITA. If he is able so to claim, the relief would result in his
income tax for 2009-2010 being reduced by 40% of £414,500, i.e. by
£165,800.
6. On 24 January 2011, Mr Derry’s accountants submitted his 2009-2010 tax
return on line. HMRC says that Mr Derry made a self-assessment of total tax
of £95,546.36. Mr Derry says that he made a self-assessment which showed a
tax refund due to him of £70,253.64. I will describe the contents of this tax
return in more detail when I discuss the issue which arises from it.
7. HMRC wished to investigate the facts as to the alleged capital loss with a view
to contending that Mr Derry is not able to establish the claimed capital loss on
the ground that the main purpose, or one of the main purposes, of the relevant
arrangements was to secure a tax advantage: see section 16A of the Taxation
of Chargeable Gains Act 1992. In addition, HMRC contend that, even if Mr
Derry had an allowable capital loss in the tax year 2010-2011, he cannot claim
relief for that loss against his income in the tax year 2009-2010 so as to reduce
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