The Caroline Sweby case saw HMRC exposed by the Tax Tribunal, writes Les Howard
Persistent poor practice by HMRC has been ruthlessly exposed by the Tax Tribunal in the case of Caroline Sweby.
The underlying substantive tax question related to loss relief in relation to ‘Pendulum Contracts’, a form of financial trading. There have been previous FTT decisions on the issue in Thomson, Mungavin and Worsfold  FTT 396 and Sherrington (TC/2009/10952).
Ms Sweby’s case turned in part on those decisions and also the FTT decision in Outram [TC/2015/03404 & 03405] on the question of discovery assessments.
So there were a number of technical legal matters under consideration. This is routine, and parties generally make applications to the FTT, for example, to stand over an appeal until the release of one or more Tribunal or Court decisions.
The FTT decision highlights that the fact that HMRC had been directed by the FTT to issue its Statement of Case within two months of the release of the Thomson decision. The two-month period expired on 16 September 2018. On 1 January 2021, HMRC applied for an extension of time to issue their Statement of Case. It was this application that the taxpayer had objected to.
The FTT’s demolition of HMRC’s application and supporting arguments is superb.
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