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This case concerned an election to carry back gift aid relief in a tax return. The First-tier Tribunal noted that ‘common sense and fairness’ appeared to be on the taxpayer’s side, but to no avail.
The taxpayer, a farmer, sold a large part of his farm in 2005/06. He wished to set up a charitable trust; his advisers told him if he did this in 2006/07, he could carry back the gift relief to the previous year and set it against the gains on the sale of his farming assets.
His 2005/06 tax return was submitted to HMRC in September 2006.
The trust was set up in January 2007 and the taxpayer made a substantial payment into it. His advisers submitted an amended return for 2005/06 making an election under FA 2002, s 98 to carry back the gift aid relief from 2006/07 on the charitable gift.
HMRC refused the claim saying that such a claim could only be made in the original return. It was too late to make it in an amended return.
The tribunal suggested that HMRC were in effect saying ‘if only Mr Cameron had not been so prompt and diligent in submitting his return, if only he had waited until 29 January 2007 before submitting his complete return, then all would have been well and he would have got his relief, but as it was his prompt compliance was his undoing’.
The tribunal examined the relevant legislation carefully but could not find anything that supported the taxpayer’s claim that a return could be an amended return. It did not signify that the amended return had been submitted before the 31 January deadline.
The judge said it was true that because an election under s 98 could not be made in an amendment to a return (unless it is delivered on the same day as the original return is delivered), this could cause a delay in the delivery of returns.
However, this was not an ‘absurdity in the sense of a result wholly inconsistent with the aim of encouraging charitable giving. It is in the circumstances an odd stipulation and one for which no clear policy may be evident’.
The tribunal concluded that the natural and literal meaning of ‘the date on which the donor delivers his return… under [TMA 1970] s 8’, as stipulated in FA 1998, s 98, is the date on which the original return is delivered, and does not include an amended return.
However, the judge added that he would have liked to have held in the taxpayer’s favour but on the words of the statute, was unable to do so.
The appeal was dismissed.
