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12 August 2020

R (oao (1) John Boulting (2) PSC Training and Development Group Ltd) v HMRC; (High Court)

In R (oao (1) John Boulting (2) PSC Training and Development Group Ltd) v HMRC, the claimants sought permission for judicial review of HMRC’s decision to treat a clearance given under s. 1044 Corporation Tax Act 2010 as void and assess a shareholder who had sold his shares back to a company to income tax on the consideration received for the sale as opposed to capital gains tax. HMRC considered the clearance to be void because it was made without full or accurate disclosure of facts or circumstances, namely that the shares in question were worth much less than the value the company had relied upon in applying for the clearance, so that he purchase was not for the benefit of the company’s trade, as required by s. 1033 CTA 2010, but rather for the benefit of the shareholder. The claimants contended that the clearance application did not require them to provide a valuation of the shares and they could not then have known that HMRC would later take a different view of valuation, which in any event was irrelevant to the clearance procedure. The Court refused permission on the basis that there was a suitable alternative remedy in the form of an appeal to the tribunal, which would be able to consider evidence regarding the valuation of the shares.

Sadiya Choudhury acted for HMRC.

To see the approved Decision, click here.