The Commissioners for HM Revenue and Customs v Invercylde Property Renovation LLP and Clackmannanshire Regeneration LLP
| Jurisdiction | UK Non-devolved |
| Judge | Lord Tyre,Judge Raghavan |
| Neutral Citation | [2020] UKUT 0161 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,27 May 2020 |
| Date | 27 May 2020 |
| Published date | 27 May 2020 |
[2020] UKUT 0161 (TCC)
Appeal number: UT/2019/0139
INCOME TAX –– limited liability partnerships – Income Tax (Trading and Other Income)
Act 2005, section 863 – whether HMRC had power to open enquiry under Taxes
Management Act 1970, section 12AC – whether any enquiry should have been made under
Finance Act 1998, Schedule 18, paragraph 24 – whether closure notices issued under
Taxes Management Act 1970, section 28B were valid – yes – appeal allowed.
UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
ON APPEAL FROM THE
FIRST-TIER TRIBUNAL (TAX CHAMBER)
THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS
Appellants
v
INVERCLYDE PROPERTY RENOVATION LLP
and
CLACKMANNANSHIRE REGENERATION LLP
Respondents
TRIBUNAL: LORD TYRE
JUDGE RAGHAVAN
Hearing conducted remotely by video conference deemed to be held in Edinburgh on 27
and 28 April 2020
Julian Ghosh QC and Michael Ripley, instructed by the Office of the Advocate General
for Scotland, for the Appellants (HMRC)
Keith Gordon and Ximena Montes Manzano, instructed by Keystone Law, for the
Respondents (Inverclyde Property Renovation LLP and Clackmannanshire
Regeneration LLP)
© CROWN COPYRIGHT 2020
2
DECISION
Introduction
1. The respondents in these two appeals (“the LLPs”) are two limited liability partnerships
who made claims for business property renovation allowance. The appellants (“HMRC”)
opened enquiries into the LLPs’ tax returns and subsequently issued closure notices
concluding that the LLPs were not carrying on a business with a view to profit and not
therefore entitled to claim the allowance. The LLPs appealed to the First-tier Tribunal
(“FTT”).
2. One of the LLPs’ grounds of appeal was that HMRC had had no power to open an
enquiry under the income tax self-assessment provisions in section 12AC of the Taxes
Management Act 1970 (“TMA”), and accordingly that there had been no valid closure
notices under section 28B of that Act. The LLPs argued that any enquiry should have
been made under the corporation tax self-assessment provisions in Schedule 18 to the
Finance Act 1998. The FTT accepted the LLPs’ argument and held that no valid closure
notices had been issued. The appeals were struck out under rule 8(2)(a) of the Tribunal
Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, on the ground that the FTT
had no jurisdiction in relation to the proceedings.
3. HMRC now appeal to the Upper Tribunal against the FTT’s finding. The issue is one of
statutory interpretation; there are no material facts in dispute. The matter is therefore at
large for this Tribunal to determine.
Limited liability partnerships
4. Limited liability partnerships were created as a new form of legal entity by the Limited
Liability Partnerships Act 2000. In terms of section 1(2) of that Act, a limited liability
partnership is a body corporate, with legal personality separate from that of its members,
which is formed by being incorporated under the Act. Section 1(5) provides that, except
as otherwise provided by the 2000 Act or any other enactment, the law relating to
partnerships does not apply to a limited liability partnership.
5. For a limited liability partnership to be incorporated, two or more persons associated for
carrying on a lawful business with a view to profit must subscribe their names to an
incorporation document and deliver it to the registrar of companies (the 2000 Act, section
2(1)). On incorporation, the subscribers become the members of the limited liability
partnership (section 4(1)). Thereafter any other person may become a member with the
agreement of the existing members (section 4(2)).
To continue reading
Request your trial