James Keighley & Anor v The Commissioners for HMRC
Decision date: 8 January 2024
Neutral citation: [2024] UKFTT 30 (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 case concerns James Keighley’s use of a company credit card for personal expenditure and Primeur Ltd’s partial write-off of a loan to Valley Dale Properties Ltd (VDP), with related discovery assessments, corporation tax adjustments and penalties. The Tribunal found Mr Keighley’s failures to declare benefits were deliberate (including “blind-eye” knowledge), upheld HMRC’s use of the presumption of continuity to extend assessments back to 2001, and dismissed his appeals; it also found the company’s partial release of secured rights had an unallowable purpose so CT relief was disallowed for the write-off, upheld the October 2020 discovery assessment, allowed part of the petty-cash claim (80%) and adjusted penalties/NICs down to carelessness in some respects.
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 a taxpayer has actual or “blind‑eye” knowledge of undisclosed benefits and fails to correct returns, that conduct can constitute deliberate behaviour, permitting extended discovery assessments and application of the presumption of continuity to estimate earlier years; additionally, a purported revenue amendment without statutory basis does not preclude a later valid discovery assessment, and a partial release of secured lender rights that benefits shareholder‑creditors at the company’s expense can amount to an “unallowable purpose” preventing corporation tax relief on a loan write‑off.
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 suggested (obiter) that reliance on SP 8/91 might require resolution by judicial review and that a taxpayer seeking to rely on a statement of practice must have “clean hands” where fraud or negligence is alleged; it also commented that the standard of reasonable care for advisers is judged against the adviser’s expertise and that failing to address fundamental statutory anti‑avoidance considerations may amount to adviser carelessness.