Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

News - Revenue

15 January 2006
Categories: News , Income Tax , Investments
Appeal sought - Arctic Systems; insurance legislation

Appeal sought

HMRC have confirmed that they have decided to petition the House of Lords for leave to appeal against the decision of the Court of Appeal in Jones v Garnett, commonly known as Arctic Systems Ltd.
As to completion of self assessment tax returns, HMRC believe that in the circumstances, i.e. given their petition to appeal against the Court of Appeal's decision, it would be premature to reconsider the guidance and the examples they issued in November 2004 in 'A Guide to the Settlements Legislation for Small Business Advisers', saying that 'the correct time to do that is when the case has been finally resolved'.
However, HMRC acknowledge that the Court of Appeal judgment represents the law as it now stands, thus taxpayers whose circumstances are consistent with the situation in Jones v Garnett are 'entitled to self assess or, within the time limits allowed, amend a self assessment in accordance with that judgment'. Details of amendments can be provided in any area of white space in the self assessment return. Taxpayers who have already filed their tax returns online, but wish to make an amendment can do so by writing to HMRC. A full paper return does not have to be resubmitted.
Where there are open enquiries into similar cases, HMRC intends to keep them open pending finality. A taxpayer who considers he is affected by this judgment may apply to the Commissioners for a direction requiring HMRC to issue a closure notice, but HMRC say it is their 'intention to oppose the application on the grounds that the possible appeal to the House of Lords constitutes reasonable grounds for not issuing a closure notice'.
Emphasising the fact that HMRC is only asking for leave to appeal, Francesca Lagerberg, national tax director, Smith & Williamson says that there is 'no guarantee' that the House of Lords will grant it. She is 'disappointed' at HMRC's decision, and points out that the Appeal Court's decision was particularly strong, as it was unanimous and involved the Chancellor. She also says that HMRC's November 2004 guidance does not take account of the Court of Appeal decision, so it should be looked at in conjunction with that decision. Further guidance from the tax bodies will be published this week on the Tax Faculty's website, www.icaew.co.uk/taxfac.
The Professional Contractors Group is 'disappointed' with HMRC's decision to seek leave to appeal. Simon Juden, PCG chairman, says that if the Government wants to extend the scope of the settlements legislation to include normal family businesses, 'the honest way to proceed would be, as the judges in this case stated, to legislate openly and clearly'. He says that by seeking to appeal further, 'HMRC have chosen to expose hundreds of thousands of businesses to yet more uncertainty, especially with regard to their self assessment positions, rather than accept the common sense verdict delivered in this case'.


Insurance

Legislation ensuring that unexpected tax charges do not arise for life assurance policyholders where their policies are transferred to a different insurance company under a court-approved insurance business transfer scheme has been published by the Government.
In addition, the proposed legislation will ensure that if the only change made to a policy, apart from the transfer, is to the basis for determining the benefits secured, for instance a change from with-profits to non-profit unit linked, no inappropriate tax consequences will arise for policyholders where that change is made on or after 7 October 2005.
Comments are invited about this draft clause and should be sent by 28 February 2006, to: David Pither, HMRC, CT & VAT (Insurance Group), Mailstation A, 3rd Floor, 100 Parliament Street, London SW1A 2BQ.
www.hmrc.gov.uk

Categories: News , Income Tax , Investments
back to top icon