First-tier Tribunal (Tax)

[2010] UKFTT 587 (TC)

TC00837

Appeal numbers: TC/2010/02171

And TC/2010/02173

Claim for Taper Relief - Whether properties sold by the Appellants qualify as business assets

FIRST-TIER TRIBUNAL

TAX

MR GURMAIL SAHOTA

AND

MRS RANI SAHOTA Appellants

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: Ms J. Blewitt (TRIBUNAL JUDGE) Ms A. Christian (MEMBER)

Sitting in public at York House, Leeds on 11 November 2010

Dr Sen, Sen and Co, for the Appellants

Mr Burke, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.       The issue before the Tribunal is whether the Appellants’ claim for business asset Taper Relief should be allowed. The properties concerned in this appeal are a public house with living accommodation and a separate accommodation property at 56a and b and 54 Wood Lane, Whitwood, Castleford.

2.       Dr Sen on behalf of the Appellants confirmed to the Tribunal that there was no challenge to the legislation or case law applicable in this case or HMRC’s interpretation of that legislation; namely that the Appellants are not entitled to taper relief as their property letting business does not qualify as a trade, and as the properties in question were not rented nor used in trade they are therefore only eligible for non-business asset Taper Relief.

3.       The Tribunal was invited to consider whether it has any discretion to mitigate the amount of tax assessed as due by HMRC as a result of the sales of the properties.

4.       The Tribunal was invited by Dr Sen to look at the broader picture and the individual circumstances of this case in which it is submitted that the Appellants are hard-working members of the community who have contributed a great deal to the local economy. The Tribunal was also asked to bear in mind that the Appellants have in the past bought, but not sold, properties they have acquired. Dr Sen sought to persuade the Tribunal that the Appellants’ business would face potential financial ruin if the claim for taper relief is disallowed.

5.       The Tribunal noted that the potential financial consequences to the Appellants was not a ground of appeal specified in the Notice dated 11 February 2010 and prior correspondence between Dr Sen on behalf of the Appellants and HMRC dated 14 August 2009 confirmed that lack of funds was not a ground relied upon. The Tribunal found that any financial consequences to the Appellants was not a relevant consideration in determining the issue in this case and even if it were relevant, there was no evidence before the Tribunal upon which it could find that any hardship existed.

6.       Whilst the Tribunal was sympathetic to the position in which the Appellants now find themselves, the Tribunal found that in applying the doctrine of equality and fairness, as invited to do by Dr Sen that this must apply to all taxpayers equally. The Tribunal found that the legislation and case law makes clear that there is no power or discretion available to the Tribunal to mitigate the tax due. Even if there had been, the Tribunal found that there were no exceptional circumstances or facts particular to this case which would lead to a miscarriage of justice in upholding HMRC’s revised Self Assessments.

7.       The appeals are dismissed.

8.       This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

TRIBUNAL JUDGE

RELEASE DATE: 23 November 2010