Michael Murphy & Anor v The Commissioners for HMRC
Decision date: 17 October 2024
Neutral citation: [2024] UKFTT 947 (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 challenged an HMRC discovery assessment increasing SDLT after HMRC compared the SDLT return with Land Registry information and noted a contemporaneous supplemental deed purporting a subsale. The Tribunal held Officer Lewis validly formed a reasonable belief of an insufficiency and that, applying FA 2003 s 45 (or alternatively s 75A), the total chargeable consideration was £336,555. 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: medium
A discovery assessment under Sch 10 para 28 can be validly raised where an officer, confronted with a contemporaneous mismatch between the SDLT return and Land Registry entries (and awareness of advisers' involvement), forms a genuine belief that there has been an insufficiency of tax and that belief is one a reasonable officer could reach on the available evidence. On the substantive point, where a subsale relates only to part of an original contract, s 45(5) treats the original contract as split and the notional secondary contract treats the transferee as purchaser of that part, so that consideration includes the portion of the original contract consideration referable to that part given (directly or indirectly) by the transferee and the consideration for transfer of rights.
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 that reliance by an assessing officer on internal processes or colleagues' guidance does not necessarily fetter discretion or invalidate a discovery so long as the officer reaches his own view. It also suggested, by way of illustration, that where one joint purchaser agrees to assume sole responsibility for part of jointly incurred consideration, that assumption can be valued (illustratively at half in the Tribunal's approach) when computing consideration under s 45(3)(b)(ii).