Andrew Moffat v The Commissioners for HMRC
Decision date: 5 June 2025
Neutral citation: [2025] UKFTT 663 (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 Tribunal decision joined two appeals: whether the sale of Chelsea Marine Ltd/Chelsea Yacht & Boat Co Ltd qualified for Entrepreneurs' Relief (ER), and whether HMRC correctly imposed penalties for careless inaccuracies in the taxpayers' 2016/17 returns. The Tribunal held CYBC was not a trading company for ER because a substantial part of its activities were non‑trading (notably mooring fees/licences and cost‑recharged maintenance), so ER was refused. The Tribunal nevertheless found the appellants had taken reasonable care by relying on professional advice and allowed the appeals against the Schedule 24 penalty assessments.
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
The Tribunal indicated that whether a company is a "trading company" requires a holistic, qualitative and quantitative assessment of the company's activities in commercial terms; "substantial" means of material or real importance to the company as a whole. Income from the right to use a houseboat at one location (mooring fees/licences) can fall within the statutory category of income from land and be non‑trading even when services are provided, and maintenance charges passed on at cost are unlikely to be trading receipts. These principles determined that CYBC’s property‑type receipts were substantial and precluded ER.
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 observed (as a useful practical approach) that analysis should identify (1) the activity giving rise to the payment and (2) whether customers are paying for occupation/use of land or for a package of services. It also indicated that reliance on competent professional advisers, including oral advice and joint preparation of disclosure, can suffice to show reasonable care for penalty purposes; taxpayers are not obliged to obtain HMRC confirmation.