Anthony Outram & Ross Outram v HMRC [2026] UKFTT 248 (TC)

The First-tier Tribunal has allowed an appeal by Anthony and Ross Outram following an order by the Upper Tribunal ([2024] UKUT 00203 (TCC)) to set aside the original decision of the First-tier Tribunal ([2021] UKFTT 126 (TC)) dismissing their appeals. The Upper Tribunal remitted the appeal to the First-tier Tribunal for a full rehearing. The appeals concerned claims for trading losses made by the Outrams in their tax returns as a result of their use of the “Pendulum” scheme that was marketed by a firm within the Montpelier Group. The Outrams had previously conceded that the scheme did not work.  The only issue in the appeal was whether the Outrams had made a deliberate error in their returns in claiming losses as a result of the Pendulum scheme

It was common ground that the question of whether the Outrams had brought about a loss of tax deliberately  depended on whether they had actual or blind-eye knowledge that they were not entitled to claim trading loss relief in their returns.

The Tribunal referred to the Supreme Court’s decision in Tooth [2021] UKSC 17 as confirming that the test for deliberate inaccuracy is subjective. It considered that blind-eye knowledge “demands a specific and firmly grounded suspicion coupled with a deliberate decision not to investigate because of concern about what would be discovered” based on the House of Lords’ decision in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2001] UKHL 1.

HMRC, who bore the burden of proof, contended that the Outrams were aware that they had not established a trade in contracts for differences before entering the Pendulum scheme, contrary to the advice they had received from Montpelier. They also failed to ensure that the loan arrangements were implemented or that the margin call balances were paid, despite knowing that these were integral to the scheme. These failures, taken together with the Appellants’ purpose of securing a tax advantage, demonstrated deliberate conduct.

The Outrams claimed that they neither had actual or blind-eye knowledge of any errors. They had relied on professional advice throughout including Montpelier’s assurances, references to counsel’s opinion and the fact that their returns had been prepared by their accountants. Their purpose was not confined to generating a tax loss but included a genuine expectation of profit.

The Tribunal accepted the Outrams’ evidence that because they were already conducting a finance trade, they considered that they had done sufficient to establish a trade, that they believed that there was a possibility of making a profit from the arrangements and that they had understood that Montpelier had put the loans in place. The Tribunal therefore allowed their appeals, holding that the Outrams had neither actual nor blind-eye knowledge that their returns were inaccurate.

You can read a copy of the judgment here.

Jeremy Woolf acted for the Appellants and Sadiya Choudhury KC  for HMRC.