UT decides Part 7A applies to remuneration trust contributions/loans, and addresses questions of procedural fairness

The Upper Tribunal has released two decisions in relation to the Marlborough DP Ltd.

In the substantive decision, the UT ruled that Part 7A ITEPA applied to the contributions/loans made in a remuneration trust scheme, and that the contributions were not deductible for corporation tax purposes, allowing HMRC’s appeal on both points. The UT held there was no error of law in the FTT’s decision that s.62 ITEPA did not apply. This is an important decision in the litigation of remuneration trusts, and more generally for providing guidance on when something with be “in connection with” employment for the purposes of Part 7A.

In the supplementary decision, the UT dismissed MDPL’s arguments that there had been procedural unfairness, and that in any event the arguments made would not have changed the substantive decision. In doing so the UT has provided useful guidance on the issue of procedural unfairness, stating –

“First, circulation of a draft judgment is not intended to provide counsel with an opportunity to re-argue the issues in the case. Second, it is only in the most exceptional circumstances that it is appropriate to ask the judge to reconsider a point of substance. Third, the guidance provided by Smith LJ draws a clear dividing line between attempting to re-argue the issues, which is not permitted, and exceptional circumstances such as a judge deciding a case on the basis of a point which was not properly argue or an authority which was not considered.”

Sarah Black acted for HMRC led by Julian Ghosh KC (One Essex Court), alongside Barbara Belgrano (Pump Court Tax Chambers) and Colm Kelly (Devereux Chambers).