The Commissioners for HM Revenue and Customs v Mitesh Dhanak
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Richards |
| Neutral Citation | [2014] UKUT 0068 (TCC),[2014] UKUT 0068 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,11 February 2014 |
| Date | 11 February 2014 |
| Published date | 01 December 2016 |
Page 1
[2014] UKUT 0068 (TCC)
Appeal numbers: TC/08264/2010
TCC/JR/04/2011
FTC/52/2012
Non-approved retirement benefits scheme – refusal of relief from income tax in respect of
payments by employer – proper procedure for challenge by taxpayer – judicial review or
statutory appeal
Non-approved retirements benefits scheme – refusal of relief after issue of closure notice –
whether too late to challenge refusal in appeal against closure notice (if statutory appeal
were the correct route of challenge)
Non-approved retirements benefits scheme – section 392 Income Tax (Earnings and
Pensions) Act 2003 – substitution of taxpayer’s brother for taxpayer as beneficiary –
meaning of “event” – whether substitution was a “payment” if made pursuant to a moral
but not legal obligation – whether payments by the brother to the taxpayer out of benefits
under the scheme could be in substitution for benefits for the taxpayer
IN THE UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMERS Appellants/Respondents
-and-
MITESH DHANAK Respondent/Appellant
Tribunal : Mr Justice David Richards
Sitting in public in London on 26-28 June, 26 July 2013
Mr James Rivett, counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for HM Revenue and Customs
Ms Hui Ling McCarthy, instructed by McKie & Co (Advisory Services) LLP, for Mr
Dhanak
Page 2
Mr Justice David Richards :
Introduction
1. The issue of this Decision has been considerably delayed because, following
provision of the Decision in draft to the parties, they requested time to agree a
resolution of the issues which remained between them following this Decision.
The parties have now agreed a form of order which gives effect to the
Decision and, by consent, deals with the outstanding matters. There is set out
at the end of this Decision the substantive parts of the order.
2. A sum paid by an employer, in accordance with a non-approved retirement
benefits scheme, to provide relevant benefits for an employee counts as
employment income of the employee. It is chargeable to income tax in the tax
year in which the sum is paid. This is the effect of section 386 of the Income
Tax (Earnings Pensions) Act 2003 (ITPA 2003). In certain circumstances, an
application for relief in respect of the tax on such sum may be made to HMRC
under section 392 of the same Act.
3. The present case arises from the refusal of an application for relief made by
the taxpayer, Mitesh Dhanak, in respect of tax arising on the sums paid to a
retirement benefits scheme for his benefit in the tax years 2003/04 and
2004/05. The application for relief under section 392 was made on 11
February 2010 and was refused by HMRC on 17 November 2010.
4. Mr Dhanak’s attempts to challenge the refusal of his application for relief has
resulted in something of a procedural thicket.
5. Mr Dhanak first sought to raise the issue of his entitlement to relief under
section 392 by appealing against amendments made by closure notices issued
by HMRC on 20 April 2009 in respect of his self-assessment tax returns for
the relevant years.
6. HMRC contends that the refusal of relief under section 392 cannot be the
subject of a statutory appeal but can be challenged only by way of an
application for judicial review. HMRC applied to the First-tier Tribunal for
directions striking out the appeal on the grounds that the Tribunal had no
jurisdiction to consider the refusal of relief. By a decision made on 21 March
2012, the First-tier Tribunal (Judge Bishopp) dismissed the application by
HMRC. Judge Bishopp subsequently gave permission to appeal against this
decision.
7. In order to protect his position in the light of HMRC’s position that the refusal
of relief could not be the subject of a statutory appeal, Mr Dhanak issued a
claim on 16 February 2011 for judicial review of HMRC’s decision dated 17
November 2010 to refuse his application for relief. By an order made by the
Administrative Court on 20 May 2011, permission to proceed was granted and
the claim was transferred to the Upper Tribunal pursuant to section 19 of the
Tribunals, Courts and Enforcement Act 2007 (TCEA 2007).
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