The Commissioners for HM Revenue and Customs v Hamilton and Kinneil (Archerfield) Limited and Others
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Warren |
| Neutral Citation | [2015] UKUT 0130 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,20 March 2015 |
| Date | 20 March 2015 |
| Published date | 01 December 2016 |
[2015] UKUT 0130 (TCC)
Appeal number: FTC/94/2014
INCOME TAX /CORPORATION TAX - Losses – interpretation of s118ZC ICTA
1988 limit on loss relief for members of LLPs - whether appellant’s third share in
capital of LLP was “contributed” as capital (s118ZC(3) ICTA) on basis that this
was the amount appellant had exposed to risk– no - whether appellant’s third share
was included in amount the appellant was “liable to contribute” to the assets of the
LLP in the event LLP was wound up (s118Z(4)(a) ICTA) – no - appeal from Tax
Chamber allowed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Appellants
- and -
(1) HAMILTON & KINNEIL (ARCHERFIELD)
LIMITED
(2) ARCHERFIELD ESTATES LIMITED
(3) H&K ENTERPRISES LIMITED
Respondents
TRIBUNAL:
MR JUSTICE WARREN CP
Sitting in public at George House, Edinburgh on 17 February 2015
Graham Maciver for the Appellants
Julian Ghosh QC and Thomas Chacko for the Respondents
2
© CROWN COPYRIGHT 2015
3
DECISION
Introduction
1. The appellants (“HMRC”) appeal from the decision of the Tax Chamber released
on 10 April 2014 (“the Decision”) allowing the appeals by the respondents
against amendments to their respective corporation tax returns. The appeal of the
first respondent (“HKAL”) was for the period ending 28 February 2009 and the
appeals of the second respondent (“Estates”) and the third respondent
(“Enterprises”) were for the periods ending 31 October 2007,31 October 2008
and 31 October 2009. The amendment to HKAL’s return reflected the non-
availability of the loss which it had claimed and the returns of Estates and
Enterprises reflected the knock-on effect of part of the loss claimed being
unavailable for surrender to them.
2. The tribunal comprised Judge Raghavan and Mr Richard Law (together “the
Tribunal”). The Tribunal were split on their ultimate decision although there was
common ground on one issue. By the casting vote of Judge Raghavan, it was held
that the loss claimed by HKAL was available and its appeal allowed. The
surrender of part of the loss to Estates and Enterprises was therefore effective and
their appeals were also allowed.
3. I will refer to paragraphs of the Decision in this format: Decision [x]. The facts
agreed are set out in Decision [5] to [24]. I do not need to repeat them. The
material points are these:
a. HKAL was at all relevant times a member of the limited liability
partnership called The Renaissance Club at Archerfield LLP (“RCA”).
The other member was at all material times a Delaware limited liability
corporation called Invest Archerfield LLC (“IALLC”).
b. IALLC represented the interests of a group of American investors. HKAL
and IALLC were at all material times dealing at arm’s length.
c. The purpose of RCA was to develop and run a golf course and associated
hospitality business on the Archerfield Estate in East Lothian. RCA was
governed by an agreement (“the LLP Agreement”) dated 1 April 2005.
d. RCA made substantial trading losses during the years in issue. For its
accounting period ending 29 February 2008, HKAL claimed trading losses
relating to RCA of £806,058 and for its accounting period ending 28
February 2009 it claimed trading losses of £835,351
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