SC Properties Limited & Anor v The Commissioners for HMRC
Decision date: 6 July 2022
Neutral citation: [2022] UKFTT 214 (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 a husband-and-wife partnership (R & E Cooke Partnership) existed so that TCGA 1992 s161 and ITTOIA 2005 s178 elections could defer a capital gain and whether Schedule 15 FA 2003 removed SDLT on transfer to SC Properties Ltd. The Tribunal found no legally real partnership, so the elections had no effect, the Cookes owned the property when it was sold, a chargeable gain arose (taxable gain £716,745, half chargeable on Mr Cooke) and SDLT of £151,342 was payable. The appellants' additional claimed enhancement expenditure was not proven.
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
A party asserting a partnership must prove, by objective evidence, that a business was carried on in common by two or more persons with a view to profit; mere completion of tax forms, partnership accounts, registrations or advisers’ paperwork is insufficient evidence of a legally real partnership. Independent commercial indicia (banking, contracts, independent dealings and contemporaneous third‑party recognition) are material in assessing whether a purported partnership has substance.
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 judgment observes that informal spousal arrangements lacking commercial substance cannot be converted into partnerships for tax purposes by reliance on tax filings or elections alone, and that tax planning unsupported by substantive commercial arrangements will not be given legal effect.