February's Hot Cases returns with our pick of useful cases for accountants and advisors including a £6m unfair dismissal payment found taxable, a military defence fails HCBIC attack and 'clever' schemes to avoid tax on properties fail and fail again.

Libor rigging dismissal claim was taxable
A senior Deutsche Bank AG employee sacked in the fallout of the 2012 Libor rigging scandal, received £6m in compensation for unfair dismissal. The Upper Tribunal has rejected the taxpayer's claim that the payment was received as a result of discrimination and was received outside employment income and confirmed that the amount was taxable under PAYE.

HMRC right to approach employee using potential tax avoidance arrangement
In Gareth Evans vs HMRC [2023] TC08946, the First Tier Tribunal (FTT) found that information requested by HMRC in regards to Mr Evans's use of a tax avoidance scheme was 'reasonably required' to assess his overall tax position. 

Umbrella travel expenses disallowed
Another umbrella company’s pay model has not survived the hard scrutiny of the tax tribunal. A lack of evidence of sufficient 'mutuality of obligation' during downtimes meant no overarching contract of employment and therefore all worker travel costs were ordinary commuting.

Property transfer could not be rescinded for CGT 
A taxpayer who mistakenly believed that no Capital Gains Tax (CGT) would arise when transferring properties to a company owned by his wife was unable to unwind the transaction for CGT purposes. His CGT liability remained. 

Military service tax defence
A former soldier persuaded the First Tier Tribunal (FTT) to restrict the scope of HMRC's assessment for a High-Income Child Benefit Charge (HICBC). He claimed that he was unaware of the charge due to being absent from the country on military operations. HMRC's discovery was permitted due to a retrospective change in the tax law and the taxpayer missed the cut-off by a matter of days.

PRR: No evidence, no relief 
In Sabbir Patwary v HMRC [2024] TC09035, the First Tier Tribunal (FTT) found that a taxpayer gave "remarkably little" evidence to demonstrate that he occupied a property as his only or main residence. Private Residence Relief (PRR) was denied.


Rooms over garage were not a dwelling 
Not quite there! A house buyer failed in a claim that he had purchased two dwellings for SDLT, the tax tribunal was not convinced that that 'Rooms over garage' had sufficient refinements to be either suitable for use as a dwelling nor were they in the process of being adapted for such use. 

SDLT sub-sale scheme steps ignored
The Court of Appeal ended a couple's attempt to claim stamp duty land tax under a deceptively simple sub-sale relief scheme. The scheme just did not work. A company incorporated to purchase a property and then transfer it to its individual owners by way of a capital reduction did not avoid any tax as the subscription price of their shares formed consideration for the property.

SDLT hard-edged: no scope for a late MDR claim 
The Upper Tribunal has confirmed a major unfairness in the Stamp Duty Land Tax (SDLT) rules. If you have submitted a return on the basis that properties are non-residential and subsequently the subject matter is confirmed residential property, there is no mechanism to go back and claim Multiple Dwelling Relief (MDR) after the 12-month return amendment period.

SDLT and overpayment relief made clear
Can you make a late claim for Stamp Duty Land Tax (SDLT) relief? Ten appellants joined forces to test the tax rules on making a late claim for Multiple Dwelling Relief (MDR). The FTT found that their late claims were a result of 'making a mistake' with a tax claim and thus they were defeated by the basic rules for Overpayment Relief.


Cosmetic treatments were not medical care 
In Aesthetic-doctor.com Ltd v HMRC [2024] TC09030, the First Tier Tribunal (FTT) found that a private medical clinic offering cosmetic treatments was not providing medical care. Its supplies were not exempt from VAT.

VAT recoverable on Land Rovers 
In Three Shires Trailers Limited v HMRC [2024] TC09044, the First Tier Tribunal (FTT) found that input VAT was recoverable on the purchase of two Land Rover Discovery vehicles used solely for business purposes. The subsequent conversion of the vehicles into cars, by adding rear seats, did not prevent VAT recovery, or result in an output VAT charge.