Legitimate expectation agreed for Jelley claims

It would be appropriate for the Revenue to allow the taxpayers’ claims for Jelley losses in certain cases, according to a department body for advising on tax dispute policy.

The announcement follows an HMRC capital gains tax liaison group meeting at which representatives requested an update of the status of Mansworth v Jelley [2003] STC 53 cases under enquiry, the Chartered Institute of Taxation technical team has reported.

The taxman agreed to issue a summary of the decision of the personal tax contentious issues panel, which last month considered whether tax officials could use their collection and management powers to give taxpayers the benefit of incorrect post-Jelley guidance when they could realistically show they relied on the information to their detriment.

HMRC’s legal advice was that the taxpayers did not have sufficient evidence to support their claims and would not succeed at judicial review – but the lapse of time since the guidance was published in 2003 makes evidence difficult to locate.

The panel agreed that, in certain cases, it would be appropriate for the Revenue to allow claims for losses. The cases would be those in which:

• taxpayers can make a realistic case that they relied on incorrect guidance;
• the taxpayer would suffer detriment if the losses were denied; and
• there would have been a legitimate expectation except that the tax department’s delay in working the enquiry means that the level of evidence officials are able to provide is limited.

The Revenue has to date agreed three claims that fell within the criteria.

Issue: 4455 / Categories: News , Mansworth v Jelley , Capital Gains , Losses