Following a meeting of the HMRC CGT Liaison Group meeting in
November 2013 at which representative bodies requested an update of
the status of Mansworth v Jelley cases under enquiry, HMRC
agreed to the issue of a summary of the decision of the Personal Tax
Contentious Issues Panel. This Panel is responsible for deciding
HMRC's position on disputed issues affecting multiple taxpayers.
The Panel has considered the use of HMRC's collection and
management powers in relation to Mansworth v Jelley cases and
legitimate expectation claims for losses. HMRC's summary of the
background and the Panel's decision is attached.
CIOT Technical Team
30 May 2014
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HMRC CGT Liaison Group Meeting
HMRC, 100 Parliament Street, Westminster, London, SW1A 2BQ
Room GE/08
10:30am – 25 November 2013
Action Point – HMRC to produce and
circulate summary of PT CIP decision.
HMRC's Personal Tax Contentious Issues Panel (PTCIP) is
responsible for deciding the Department's position on disputed
issues affecting multiple taxpayers. More information about the
operation of PTCIP can be found in Chapter 4 of The Tax Assurance
Commissioner's Annual Report 2012-13.
In June 2013 PTCIP considered the question of whether HMRC could
use its collection and management powers to give customers the
benefit of the incorrect 2003 post-Mansworth v Jelley guidance
in cases where they could make a realistic case that they relied on
it to their detriment. HMRC's legal advice was that these
customers did not have sufficient evidence to support their claim and
would not succeed at Judicial Review. However, the lapse of time
since 2003 makes evidence that much more difficult to locate and
HMRC's delay in working the enquiries has contributed to
this.
PTCIP agreed that in certain cases it would be appropriate for
HMRC to allow the customers' claims for losses. It was expected
that there would be few such cases among all those that remain
unresolved. The cases would be those in which:
- customers can make a realistic case that they relied on
incorrect guidance (in practice this is a "balance of
probabilities" test),
- the customer would suffer detriment if those losses were denied
by HMRC, and
- there would have been a legitimate expectation except that
HMRC's delay in working the enquiry means that the level of
evidence they are now able to provide is limited (again, in
practice this is a "balance of probabilities" test).
To date HMRC have agreed 3 claims which fell within the PTCIP
criteria. Where caseworkers consider that the above may apply, the
case will be reviewed and referred to the Business Head, Capital
Gains Technical for a decision if appropriate.
Capital Gains Technical Group, HMRC
5 December 2013
Appendix
Extract from minutes of meeting:
11 HMRC explained that a number of cases in
which it had been suggested that there might be a legitimate
expectation to losses had been referred for legal advice. One of
the issues this had raised was that there were cases in which the
passage of time meant that it was unlikely that sufficient evidence
could now be presented to satisfy the courts. HMRC CGT specialists
had asked the new Personal Tax Contentious Issues Panel (PT CIP) to
consider the use of collection and management powers in such cases.
PT CIP had agreed in June 2013 to the use of collection and
management powers to permit relief for losses to the extent that
customers could show that, on the balance of probabilities, they
had relied on the 2003 guidance to their detriment and legitimate
expectation could have been demonstrated at the time, but could no
longer be because of delay.
12 The PT CIP decision was being communicated
to caseworkers and a structure put in place for relevant cases to
be escalated to Alan Welsby for decision. So far, decisions have
been made to permit relief for losses in three cases. A typical
case in which relief might be permitted would be where the
customer:
- claimed losses in accordance with the method of computation
described in the 2003 guidance and shortly after the publication
of that guidance,
- disposed of assets at a gain shortly afterwards, in
circumstances in which it could reasonably be assumed that the
expectation was that the gain would be covered by those losses,
and
- could show that both events took place before the Inland
Revenue had given any indication that it would challenge the
losses.
13 The group asked if it would be possible for
HMRC to circulate the decision of the PT CIP. HMRC agreed to
produce a summary of the document for the group.