I.A. Barnett & Anor. v The Commissioners for HMRC
Decision date: 13 January 2023
Neutral citation: [2023] UKFTT 62 (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 case concerned appeals by two taxpayers against HMRC closure notices and penalties arising from redress payments received under the FCA IRHP redress scheme. The Tribunal held that the basic redress element was a refund of amounts that would not have been paid but for the mis‑sold swaps and therefore taxable as income, and it upheld penalties for lack of reasonable care because the taxpayers failed to inform their accountants of the redress. The appeals were refused.
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 redress offer letter expressly describes a payment as refunding amounts paid under a mis‑sold product, that basic redress is to be treated as income (taxable) in the recipient's hands. Additionally, a taxpayer who receives a large, unusual payment is expected to inform their tax adviser; failing to do so can amount to not taking reasonable care and justify penalties for inaccuracies.
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 it has no jurisdiction to remedy perceived unfairness in the FCA redress programme and that such perceived unfairness does not alter the tax treatment of payments. It also noted that a general scheme statement that professional advice is unnecessary does not prevent a recipient from obtaining advice.