David Stephen Sanderson v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Newey |
| Neutral Citation | [2013] UKUT 0623 (TCC),[2013] UKUT 0623 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,6 December 2013 |
| Date | 06 December 2013 |
| Published date | 01 December 2016 |
[2013] UKUT 0623 (TCC)
Appeal number FTC/46/2012
CAPITAL GAINS TAX – validity of a “discovery” assessment under section
29(1) of the Taxes Management Act 1970 - whether a “discovery” – whether
conditions of section 29(4) and (5) of the Act satisfied
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
DAVID STEPHEN SANDERSON Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Respondents
TRIBUNAL: MR JUSTICE NEWEY
Sitting in public in London on 16 and 17 October 2013
Mr Keith Gordon and Miss Ximena Montes Manzano, instructed by Bramhall
solicitors, for the Appellant
Mr David Yates, instructed by the General Counsel and Solicitor to HM Revenue and
Customs, for the Respondents
© CROWN COPYRIGHT 2013
2
DECISION
Introduction
1. This case concerns the validity of a “discovery” assessment made pursuant to 5 section 29 of the Taxes Management Act 1970 (“the TMA”). The assessment
in question relates to 1998-1999 but was not made until January 2005. In a
decision dated 20 February 2012, the First-tier Tribunal (Judge John Brooks
and Mr Peter Davies) upheld the assessment. However, the appellant, Mr
David Sanderson, appeals against that decision. 10
Basic facts
2. On 24 February 2003, HM Revenue and Customs (“HMRC”) received from
Mr Sanderson his tax return for the year ended 5 April 1999. The return 15 disclosed chargeable gains totalling nearly £1.8 million. The return also,
however, stated that losses of more than £2 million had been incurred. The
losses were almost entirely attributed to “Beneficial Interest in the Castle
Trust”. The following additional information was provided in the “white
space” in the return: 20
“EUROPEAN AVERAGE RATE OPTION (TRADE NO. 82831)
I am entitled to the loss of £1,825,663 by virtue of the provisions of
TCGA 1992 s.71(2). The loss is part of a loss of £1,000,000,000, 25 which accrued to the Trustees of the Castle Trust on 8th April 1997, on
the disposal of a European Average rate Option (Trade No. 82831)
relating to shares in Deutsche Telecom.
BENEFICIAL INTEREST IN THE CASTLE TRUST 30
On 24th November 1998, I purchased for a fee (part of which is
contingently payable) from the Trustees of the Charter Trust 2.273% of
their beneficial interest in the Trust Fund of the Castle Trust. The
interest determined on 25th November 1998, when I became absolutely 35 entitled to receive from the Trustees of the Castle Trust the sum of
£16.04.”
Mr Sanderson was thus seeking to use arrangements referred to as the “Castle
Trust Scheme” to eliminate his exposure to capital gains tax. 40
3. A helpful description of the Castle Trust Scheme is to be found in Corbally-
Stourton v HMRC [2008] STC (SCD) 907. In that case, Mr Charles Hellier,
sitting as a Special Commissioner, explained the Castle Trust Scheme in these
terms: 45
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