Land Securities PLC v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Roth,Judge Sadler |
| Neutral Citation | [2013] UKUT 0124 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,14 March 2013 |
| Date | 14 March 2013 |
| Published date | 01 December 2016 |
[2013] UKUT 0124 (TCC)
Appeal number: FTC/11/2012
Corporation tax on capital gains – scheme to generate a capital loss in reliance on the
identification rules for matching a disposal of shares with an acquisition under s 106 TCGA
1992 – value shifting rules in s 30 TCGA 1992 – application of s 30(9) notwithstanding that
the shares were owned at the time of the disposal, where disposal and acquisition form part
of the scheme which engages s 30 – whether, in the alternative, the disposal and acquisition
for the purposes of s 30(9) is determined by the computational rules required by s 106 –
Davies v Hicks applied – application of s 30(5) to eliminate the capital loss
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
Between :
LAND SECURITIES PLC
Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Respondents
TRIBUNAL: Mr Justice Roth and Judge Edward Sadler
Sitting in public in London on 29-30 January 2013
John Gardiner QC and Philip Walford (instructed by Linklaters LLP) for the Appellant
Julian Ghosh QC and Elizabeth Wilson (instructed by the General Counsel and Solicitor
to HM Revenue and Customs) for the Respondents
© CROWN COPYRIGHT 2013
Land Securities v HMRC
Page 2
DECISION
INTRODUCTION
1. This is an appeal by Land Securities PLC (“Land Securities”) against the decision of
the First-tier Tribunal (Judge Nowlan and Sonia Gable) (“the FTT”) released on 14
September 2011. The FTT dismissed appeals made by Land Securities against the
decision of Her Majesty’s Revenue and Customs (“HMRC”) to disallow claims made
by Land Securities for a capital loss for corporation tax purposes arising from
transactions entered into between March and September 2003. Those transactions
raised short-term financing for Land Securities, but as the FTT found, the more
material benefit of the transactions, which they were designed to achieve, was to
create the capital loss in question, which amounted to £202,415,181.
2. The capital loss was realised in the accounting period of Land Securities ended 31
March 2003. The capital loss was not fully utilised by Land Securities in that
accounting period, so that the unutilised portion was carried forward and claimed in
later accounting periods. Claims to utilise portions of the capital loss were made by
Land Securities for each of those relevant accounting periods. All those claims have
been disallowed by HMRC and the appeals made by Land Securities relate to those
accounting periods and the respective amounts of capital loss disallowed in each such
period. The decision of the FTT was concerned with the principle of whether Land
Securities is entitled to the capital loss it has claimed, which is accordingly the issue
on this appeal.
3. The circumstances of the decision are a little unusual in that the FTT, in dismissing
the appeal of Land Securities, did so on a ground of statutory construction which was
not argued by either of the parties at the hearing, but which was advanced by the FTT
itself, and on which the FTT invited the parties to make written submissions after the
hearing and before it reached its decision. In reaching its decision, therefore, the FTT
rejected not only the case argued by Land Securities, but also the case argued by
HMRC. In the proceedings bringing the appeal before this tribunal HMRC entered a
Response seeking permission to argue the case they had put to the FTT as well as to
argue in support of the ground on which the FTT had based its decision.
THE FACTS
4. The facts relating to the transactions which gave rise to the capital loss in question
were not in dispute, and for the purposes of the hearing before the FTT the parties had
prepared a Statement of Agreed Facts setting out those transactions.
5. Questions of motive and purpose on the part of Land Securities and related group
companies in entering into the transactions were in dispute, and the FTT heard witness
evidence from a senior executive of the Land Securities group in relation to such
matters. That evidence, and the FTT’s findings based on that evidence, principally
relates to HMRC’s case (citing the Ramsay line of authorities) that a purposive
construction of the relevant statutory provisions should be adopted in applying those
provisions to the relevant transactions, as they should be viewed realistically, to the
effect that no capital loss arises.
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