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JAMES KESSLER and AMANDA HARDY consider Burns v HMRC and the motive defence
KEY POINTS
- A brief summary of the Burns case.
- The importance of purpose rather than effect.
- The significance of the tax background to ascertaining purpose.
- Distinguishing between tax avoidance and tax mitigation.
- The evidence must justify the factual claims.
- Decision for HMRC.
The recent case of Burns v HMRC (SpC 728) deals with an important issue that often causes dispute; i.e. whether the ‘non tax avoidance’ defence (the motive defence) is available to prevent liability under the transfer of asset provisions of ITA 2007 s 720 (formerly TA 1998 s 739).
It was in relation to this section that Lord Greene MR uttered his well-known words about the section being a penal one and that ‘it scarcely lies in the mouth of the taxpayer who plays with...
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