Andrew Berry v Commissioners for Her Majesty's Revenue and Customs
Decision date: 29 December 2009
Neutral citation: [2009] UKFTT 386 (TC)
Overall AI summary confidence: medium
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: medium
This appeal concerned a tax planning package (“Gilt Strip Planning”) entered by Mr Berry designed to generate a notional income tax loss under paragraph 14A Schedule 13 FA 1996. The First-tier Tribunal held that, viewed realistically, the transactions were a single pre-ordained package in which Mr Berry did not in practice pay for or acquire a genuine economic interest in the strip and therefore did not “sustain a loss” for tax purposes. The Tribunal rejected treating the arrangements as a legal sham but found they lacked the necessary tax reality, so HMRC’s denial of loss relief and the amendment to Mr Berry’s return were upheld.
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: medium
Where formally separate steps are in truth a pre‑ordained, self‑cancelling package leaving the taxpayer exposed to no real economic risk, the requirement that a taxpayer have “sustained a loss” under paragraph 14A Schedule 13 FA 1996 is not satisfied; formal documentation and nominal transfers controlled and hedged by a bank or SPV are insufficient if, realistically, no payment, entitlement or risk passed to the taxpayer.
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 indicated (obiter) that a real commercial possibility can nonetheless be disregarded if the parties proceeded on the basis of disregarding it, and that backdated or protective paperwork and accounting entries executed without genuine authority can show the paperwork served to protect the bank rather than effect genuine transfers.