Tower Radio Limited/ Total Property Support Services Limited v The Commissioners for Her Majesty's Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | , |
| Judgment Date | 13 February 2015 |
| Neutral Citation | [2015] UKUT 0060 (TCC) |
| Respondent | REVENUE AND CUSTOMS |
| Appellant | UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER) (1) TOWER RADIO LIMITED (2) TOTAL PROPERTY SUPPORT SERVICES LIMITED |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/120/2013 |
[2015] UKUT 0060 (TCC)
Appeal number: FTC/120/2013
INCOME TAX – Part 7 of the Income Tax (Earnings and Pensions) Act
2003 – restricted securities – tax avoidance scheme - the Ramsay principle
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
(1) TOWER RADIO LIMITED
(2) TOTAL PROPERTY SUPPORT SERVICES LIMITED
Appellants
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Respondents
TRIBUNAL:
Mr Justice Newey
Judge Colin Bishopp
Sitting in public in London on 24-26 November 2014
Mr Giles Goodfellow QC, instructed by Barnes Roffe LLP, for the Appellants
Mr Timothy Brennan QC, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2015
2
DECISION
Introduction
1. This case concerns a tax planning scheme (“the Scheme”) that was promoted 5 by Barnes Roffe LLP, a firm of accountants. The Scheme was designed to
allow companies’ employees and officers to be given bonuses which would
not attract income tax or national insurance contributions (“NICs”) deductions.
This was to be achieved by awarding the employees or officers shares in
specially-formed subsidiaries of the companies rather than cash and, hence, 10 taking advantage of Part 7 of the Income Tax (Earnings and Pensions) Act
2003 (“ITEPA”), which “contains special rules about cases where securities,
interests in securities or securities options are acquired in connection with an
employment” (as section 417(1) explains).
15 2. The appellants, Tower Radio Limited (“Tower”) and Total Property Support
Services Limited (“Total”), were each amongst those who made use of the
Scheme. HM Revenue and Customs (“HMRC”) say that the Scheme does not
achieve its intended purpose and have issued determinations and decisions
designed to recover the income tax and NICs for which they say the appellants 20 should have accounted. Their appeals were designated by the First-tier
Tribunal (“FTT”) as lead cases. Other cases relating to the Scheme have been
stayed (in England and Wales) or sisted (in Scotland) pending the resolution of
matters as regards Tower and Total.
25 3. The FTT identified the following issue as arising:
“Whether the sums or benefits received by officers or employees
pursuant to arrangements registered as Disclosed Tax Scheme
54003391 and adopted by the Lead Case Appellants and others during 30 the tax years 2003-04 and/or 2004-05 are:
(a) chargeable to income tax as employment income, and, if so, as
PAYE income; and/or
35 (b) constitute earnings liable for National Insurance
Contributions”.
4. In a decision released on 11 July 2013 (“the Decision”), the FTT (Judge Peter
Kempster and Mr John Whiting OBE) held that this issue fell to be resolved in 40 favour of HMRC. The FTT concluded that the sums or benefits in question
were (a) chargeable to income tax as employment income and PAYE income
and (b) constituted earnings liable for NICs (see paragraph 170 of the
Decision). Tower and Total, however, appeal against the Decision.
45 5. The case turns, essentially, on the impact (if any) of the Ramsay principle (see
paragraph 30 below). More particularly, it raises the question of whether, in
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