Timothy Watts v The Commissioners for HMRC
Decision date: 7 November 2022
Neutral citation: [2022] UKFTT 408 (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 Mr Watts' claim under para 14A Sch 13 FA 1996 arising from a Grant Thornton gilt‑strip scheme and HMRC's closure notice disallowing the claimed loss. The First‑tier Tribunal found the arranged transactions were implemented and should be treated as a single commercial composite transaction, and held that "amount payable on the transfer" is a commercial concept that, on the facts, includes the full consideration paid by Investec; it recalculated the allowable para 14A loss at £6,300 and allowed the appeal in part.
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
Where a taxing provision defines loss by reference to amounts payable on a transfer, those formula elements may be commercial concepts; in a bona fide third‑party purchase structured as an interrelated composite transaction the tribunal should identify the real commercial consideration and include it when quantifying the statutory "amount payable on the transfer" rather than restricting the concept to a narrow legal form such as only the exercise payment to the transferor.
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 observed that para 14A's concept of loss involves both legal/notional and commercial elements given the deemed annual disposal regime for strips, and commented that legislative history and explanatory material may be admissible to show Parliamentary intent regarding gilt strips, but such material does not automatically preclude a purposive commercial analysis of consideration in transfers.