In Hopscotch Limited v HMRC [2020] UKUT 0294, the Upper Tribunal (UT) upheld a First Tier Tribunal (FTT) decision that the taxpayer was subject to the Annual Tax on Enveloped Dwellings (ATED). The redevelopment of the property did not constitute a trade and so relief from the charge was not available.

In the FTT hearing, Hopscotch Limited appealed the ATED charge for the years ending 31 March 2017 and 2018. The undisputed facts of the case were:

As redevelopment started in the year to 31 March 2017, the company claimed relief from the charge on the basis that it was carrying on a property development trade. 

The FTT considered Badges of Trade to determine whether or not the company was carrying on a trade. Whether or not the company was specifically carrying on a property development trade could only be considered if it was carrying on a trade. The FTT found:

Appeals can only be made on the basis that there was an error in law. When considering the Existence of a trade, this is a matter of fact based of the primary facts as found by the Tribunal. The appellant appealed on the grounds that:

The UT found no errors of law were made. The UT held that:

The appeal was dismissed.


Is it a trade, a business, or an investment activity?
Is your business a trade, a business or an investment activity? The distinction is very important for tax purposes.

Badges of trade
The 'Badges of Trade' are a series of key indicators which have been built up over time by the courts to decide whether a transaction or series of transactions constitutes a trade.

Annual Tax on Enveloped Dwellings
The Annual Tax on Enveloped Dwellings (ATED), originally called the Annual Residential Property Tax, is an annual charge on UK dwellings held by a non-natural person, e.g. a company.

External links

Hopscotch Limited v HMRC [2020] UKUT 0294

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