Mr Nicholas Barnes v Commissioners for Her Majesty's Revenue and Customs
Decision date: 31 January 2011
Neutral citation: [2011] UKFTT 95 (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 a packaged gilt stock‑lending scheme used by Mr Barnes to obtain a £1.2m coupon shelter. The Tribunal held that the accrued income provisions (ss 710–714) applied so Mr Barnes was prima facie taxable on the coupon, that the stock‑lending disregard (s263B TCGA 1992 / s727 TA 1988) did not apply because the 100.01% redelivery obligation meant the redelivered securities were not the "same quantities", and that any manufactured interest deduction under sch 23A TA 1988 is limited to the amount of interest remaining chargeable after the accrued income allowance. 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
Paragraph 3(2A) of Schedule 23A must be read as restricting any manufactured interest deduction to the net amount of interest that remains chargeable after applying the accrued‑income allowance under ss 713–714; and the statutory test in s263B(6) for treating redelivered securities as "the same quantities" is applied strictly so a contractual 100.01% redelivery obligation defeats the stock‑lending disregard.
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 recorded observations (not strictly binding) on the commercial unity of pre‑packaged marketed tax schemes and the limited application of sham principles to such arrangements, and noted that recharacterising elements like purchased Margin Gilts cannot displace the statutory tests in the relevant provisions.