Too many questions

The company S a Lloyd’s insurance broker claimed marginal small companies’ relief under TA 1988 s 13 during 2004 to 2007.

HMRC opened an enquiry into the relevant returns requesting information about the company’s group structure. S replied it was a 100% subsidiary of a UK-resident company SH whose share capital was held by two Liberian companies and a pair of shareholder directors.

After further correspondence the Revenue decided the control test was not satisfied and it seemed S had associated companies based overseas. The department disallowed the claim for marginal small companies’ relief.

S appealed saying it had provided sufficient evidence there were no associated companies. HMRC said that where the association was with a company based in a tax haven such as Liberia a higher standard of certainty was required than would be in the case...