Suitable remedy is an appeal to the tribunal

In 1993 B co-founded a company to provide training. In 2014 he wished to retire. It was agreed that he would give 38% of his shareholding to his son and sell 8% to the company. The accountants applied to HMRC for and received clearance that the buyback of shares would be treated as a capital transaction under CTA 2010 s 1033. The transaction went ahead and B submitted his tax return on that basis.

HMRC later launched an enquiry into the return and decided to treat the statutory clearance as void (CTA 2010 s 1045(6)) because the share value used by the company was ‘materially greater than market value’ and it had not disclosed this in the clearance application. HMRC issued a closure notice assessing B to income tax on the transaction.

The taxpayer sought judicial review on five grounds including legitimate expectation. The High...