Mr Robert Audley v Commissioners for Her Majesty's Revenue and Customs
Decision date: 1 April 2011
Neutral citation: [2011] UKFTT 219 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether Mr Audley could claim an income tax loss under Schedule 13 for a loan note described as issued at £2,050,000 but valued actuarially at about £35,700, where the wider scheme transferred a house and cash into trusts. The Tribunal held the scheme was a pre‑arranged commercial unity, the stated issue price lacked commercial reality, the true amount paid for the security was its market/actuarial value (~£35,700) and the excess was a gift into the settlement, so no allowable loss arose. The appeal was dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The Tribunal applied a purposive and realistic approach to Schedule 13, holding that where a security is issued as part of a pre‑ordained tax planning package and the contractual issue price has no commercial reality, the relevant "amount paid" for para 2(2)(b) is the security's true/market value rather than the notional contractual figure; a marked discrepancy supports treating the remainder as a gift to the settlement.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal expressly declined to brand the documentation a "sham" in a pejorative sense but emphasised that transactions should be examined "as a commercial unity" and that mechanistic reliance on contractual figures is inappropriate where terms lack practical reality; it also noted that a party's tax‑saving intention alone does not automatically defeat relief.