Free UK Tax Law Study Guide

Overview

Our free UK Tax Law notes provide a comprehensive guide to understanding the key principles and cases in UK tax law. From understanding the tax base to navigating complex tax avoidance schemes, these notes are designed to help you consolidate your knowledge and prepare effectively. If you think something could be improved, let us know, and we'll take a look.

1. Tax Basics and Tax Base

Tax Base

• Article 110 TFEU - Prohibits discriminatory internal taxation measures within the EU single market.
• Fry v Salisbury House Estate Ltd. [1930] AC 432 - Clarifies the treatment of rental income for tax liability.
• Mitchell & Eden v Ross [1961] 3 All ER 49 - Examined the scope of taxable income in partnership arrangements.

Extra-statutory Concessions

• Vestey v Inland Revenue Commissioners [1979] 3 All ER 976 - Reshaped the concept of extra-statutory concessions in relation to trusts and estates.
• R v Inland Revenue Commissioners, ex parte National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 (HL) - Considered whether taxpayers had standing to challenge beneficial concessions given by the tax authorities.
• Preston v Inland Revenue Commissioners [1985] 2 All ER 327 - Examined judicial review of the Inland Revenue’s exercise of discretion to grant concessions.
• R v Inland Revenue Commissioners, ex parte Wilkinson [2005] UKHL 30 - Clarified the scope and limits of the Inland Revenue’s discretionary powers to create concessions.
• R v Inland Revenue Commissioners, ex parte Fulford Dobson [1987] STC 344 - Addressed the lawfulness of extra-statutory concessions in certain tax scenarios.

Clearance and Rulings

• Matrix-Securities Ltd v IRC [1994] STC 272 - Examined the scope of clearance rulings and their binding effect on tax planning schemes.

2. Capital Gains Taxes

Capital Gains Tax

• O'Brien v Benson's Hosiery (Holdings) Ltd [1980] AC 562 (HL) - Addressed the nature of CGT on corporate disposal of assets.
• Kirby v Thorn EMI [1987] STC 621 (CA) - Examined the computation of capital gains on share disposals.

Land and the Residence Exemption

Permanence and Expectation of Residence

• Goodwin v Curtis [1996] STC 1146 (Ch) - Discussed the requirement of permanence in establishing a principal private residence.
• Morgan v HMRC [2013] UKFTT 181 (TC) - Considered factual indicators to determine a taxpayer’s primary residence.
• Moore v HMRC [2013] UKFTT 433 (TC) - Further clarified the test for principal residence relief in capital gains tax.
• S Bailey v HMRC [2017] UKFTT 658 - Highlighted subjective and objective factors in establishing a taxpayer’s principal residence.

"Dwelling House and Grounds"

• Batey v Wakefield [1982] 1 All ER 61 (CA) - Explored the extension of private residence relief to associated grounds.
• Lewis v Lady Rook [1992] STC 171 (CA) - Clarified the scope of grounds that qualify for principal residence relief.

Multiple Dwelling Houses

• Griffin v Craig-Harvey [1994] STC 54 - Decided whether separate dwellings within a single property can each qualify for relief.

Chargeable Disposal

• Marren v Ingles [1980] STC 500 (HL) - Considered the timing and ascertainment of proceeds on a conditional contract for CGT.
• Zim Properties Ltd v Procter [1985] STC 90 - Examined the tax implications of selling rights to sue as an asset disposal.

Deductions

• Aberdeen Construction Group Ltd v Inland Revenue Commissioners [1978] STC 127, 52 TC 281 (HL) - Clarified allowable deductions from capital gains for improvement expenses.
• J Blackwell v HMRC [2017] EWCA Civ 232 - Examined the deductibility of certain professional fees under CGT rules.

3. Tax Avoidance

Traditional Approach to Statutory Interpretation

• Partington v Attorney-General (1869) LR 4 HL 100 - Early case emphasizing strict interpretation of tax statutes in the taxpayer’s favour.
• Cape Brandy Syndicate v IRC (1921) 12 TC 368 - One of the earliest statements on the approach to statutory interpretation in tax law, establishing that “one must look fairly at the language used” to ascertain liability.
• Wilcox v Smith (1857) 4 Drew 40 - Considered the interplay between statutory language and the taxpayer’s equitable interests.
• Leedale v Lewis [1982] STC 835 - Applied strict interpretation principles to the chargeable event for CGT.
• Pepper v Hart [1993] AC 593 (HL) - Allowed reference to parliamentary debates (Hansard) under certain conditions to interpret ambiguous tax legislation.
• IRC v Duke of Westminster [1936] AC 1 (HL) - Affirmed that taxpayers can arrange their affairs to minimize taxation if done within the letter of the law.
• Secretary of State in Council of India v Scoble [1903] AC 299 - Applied a literal approach to the interpretation of taxing provisions.

Shams

• Snook v London and West Riding Investments Ltd [1967] 2 QB 786 (CA) - Defined a “sham transaction” as one intended to disguise the true nature of a transaction.
• Hitch v Stone [1999] STC 431; [2001] EWCA CIV 63 - Reinforced that the parties’ true intentions must be examined to identify sham transactions.

New Approach

Ramsay Principle

• WT Ramsay Ltd v IRC [1982] AC 300 (HL) - Established the modern approach that courts may look at the composite effect of a scheme when interpreting tax legislation.

Circulatory Transactions

• IRC v Burmah Oil Co. Ltd. [1982] STC 30 - Extended the Ramsay principle to circular financial arrangements.
• Furniss v Dawson [1984] STC 153 (HL) - Further developed the Ramsay principle to disregard inserted steps lacking commercial purpose.

Certainty

• Craven v White [1988] STC 476 - Emphasized that a tax avoidance scheme must be fully completed as planned before applying Ramsay.
• IRC v Scottish Provident [2005] 1 All ER 325 - Clarified that hypothetical or contingent steps cannot prevent the Ramsay principle from applying.

Workability

• IRC v McGuckian [1997] STC 908 (HL) - Confirmed a purposive approach to interpretation and that focusing on legal substance is key.

Defining Purposive Interpretation

• MacNiven v Westmoreland Investments Ltd [2001] UKHL 6 [2001] STC 237 (HL) - Highlighted the difference between documentary and fiscal nullities within the Ramsay approach.
• Barclays Mercantile Business Finance Ltd v Mawson [2005] 1 AC 684 - Refined the purposive construction approach, focusing on the statute’s rationale.
• Tower MCashback LLP 1 and another v Revenue and Customs Commissioners [2011] UKSC 19 - Illustrated the modern limits of the Ramsay principle in a tax avoidance context.
• UBS AG v Revenue and Customs Comrs [2016] UKSC 13 - Reaffirmed a purposive approach to identifying the true nature of a transaction.

4. Employment Taxes

Contract of Employment

• HMRC v Professional Game Match Officials Ltd [2021] EWCA Civ 1370 - Considered whether referees in professional football matches were employees for tax purposes.
• Ready Mixed Concrete Ltd v Minister of Pensions [1968] 2 QB 497 - Established the “control test” and other criteria to distinguish between employment and self-employment.
• Autoclenz Ltd v Belcher and Others [2011] UKSC 41 - Held that courts can look beyond the written contract to the true nature of the employment relationship.

Income from Employment

Third Party Payments

• Shilton v. Wilmshurst [1991] 1 AC 684 - Held that payments from third parties for services can be taxable as employment income.

Compensatory Payments

• Hochstrasser v. Mayes [1960] AC 376 - Laid out conditions under which compensatory payments might be taxed as employment income.
• Mairs v Haughey [1994] 1 AC 303 - Considered the tax treatment of severance payments for employees.
• Wilson v Clayton [2005] STC 157 - Addressed the characterization of settlement payments to employees.

Gratuitous Rewards for Recognition

• Moorhouse v Dooland [1955] Ch 284 - Determined tax liability for gratuities and tips in an employment context.
• Moore v Griffiths [1972] 1 WLR 1024 - Examined the nature of ex gratia payments in employment.
• Blakiston v Cooper (1909) 5 TC 347 - Clarified when voluntary payments may be considered employment income.
• Calvert v Wainwright [1947] KB 526 - Analyzed the distinction between gifts and income.
• Seymour v Reed [1927] AC 554 - Considered whether testimonial money awarded to a professional cricketer was taxable.

Non-monetary Benefits

• Tennant v Smith [1892] AC 150 - Examined the scope of benefits in kind as employment income.
• Heaton v Bell [1970] AC 728 - Addressed the valuation of non-cash benefits for tax purposes.
• Laidler v Perry [1966] AC 16 - Considered tax treatment of employer-provided vouchers.
• Vertigan v Brady [1988] STC 91 - Looked at whether certain benefits were incidental or not for tax liability.
• Rendell v Went [1964] 1 WLR 650 - Explored the threshold for what constitutes a taxable benefit.

Expenses and Deductions

Travel Expenses

• Ricketts v Colquhoun [1926] AC 1 - Distinguished business from personal travel for deduction claims.
• Pook v Owen [1970] A.C. 244 - Allowed certain commuting costs as allowable expenses in limited circumstances.
• Taylor v Provan [1975] AC 194 - Considered the test for travel expenses wholly and exclusively incurred in employment.
• Kirkwood v. Evans [2002] EWHC 30 - Clarified the duality of purpose in travel expenses claims.

Private Benefits

• Brown v Bullock [1961] 1 WLR 1095 - Considered whether membership dues were allowable business expenses or personal expenses.
• Fitzpatrick v IRC (No 2) [1994] BTC 66 - Addressed deduction for professional development expenses by employees.
• Revenue and Customs Commissioners v Banerjee (No 1) [2010] EWCA Civ 843 - Considered the tax deductibility of professional training costs.

Clothing

• Mallalieu v Drummond [1983] STC 665 - Explored the requirement that clothing must be wholly and exclusively for business to be deductible.

Phone

• Lucas v Cattell (1972) 48 TC 353 - Examined whether personal phone bills are deductible as work expenses.

Food

• Caillebotte v. Quinn [1975] STC 265 - Clarified that ordinary meals are not deductible as business expenses.

5. Self-Employment Taxes

Vocation

• Partridge v Mallandaine (1886) 18 QBD 276 - Established that certain vocations (e.g., professional gambling) can be subject to taxation.

Profession

• IRC v Maxse [1919] 1 KB 647 - Addressed the distinction between a profession and a trade for tax purposes.

Fact or Law?

• Edwards (Inspector of Taxes) v Bairstow [1956] AC 14 (HL) - Held that the nature of a transaction can be determined as a matter of law, subject to appellate review.

Trade

• Rutledge v Inland Revenue Commissioners (1929) 14 TC 490 - Explored the boundaries of what constitutes a trade in tax law.
• Marson v Morton [1986] STC 463 - Set out factors to distinguish trading transactions from capital investments.

Frequency of Transactions

• Pickford v Quirke (1927) 13 TC 251 - Looked at repeated transactions as evidence of trading.

Motive

• Iswera v Commissioner of Tax, Trinidad and Tobago [1965] 1 WLR 663 (PC) - Examined intention and motive in acquiring properties for profit.
• Kirkham v Williams [1991] STC 342 - Considered the significance of profit motive in classifying a transaction as trade.
• Religious Tract and Book Society of Scotland v Forbes (1896) 3 TC 415 - Addressed charitable or religious motives and their impact on trade classification.

Computation of Taxable Profits

• Odeon Associated Theatres Ltd v Jones [1973] CH 288 - Considered the timing and recognition of expenses for computing taxable profits.
• Gallagher v Jones [1993] STC 537 (HL) - Clarified the approach to capital and revenue expenditures.

Voluntary Trading Receipts

• IRC v Falkirk Ice Rink (1975) 51 TC 42 - Examined gifts or grants to a business and whether they constitute trading receipts.
• Murray v Goodhews [1978] 2 All ER 40 - Considered the tax treatment of ex gratia payments made to a business.
• McGowan v Brown [1977] 3 All ER 844 (Ch D) - Explored the nature of voluntary contributions to a business as taxable receipts.

Capital Receipts

• Glenboig Union Fireclay Co Ltd v IRC (1922) 12 TC 427 - Held that compensation for sterilized assets is a capital receipt not subject to income tax.
• Van den Berghs Ltd v Clark (1935) 19 TC 390 (HL) - Discussed whether sums received to cancel a commercial contract were capital receipts.
• London & Thames Haven Oil Wharves Ltd v Attwool [1967] 2 All ER 124 - Analyzed compensation payments for the use of facilities as capital or revenue.
• Higgs v Olivier [1952] Ch 311 - Clarified the nature of payments to terminate a service contract as capital or revenue.
• IRC v Biggar [1982] STC 677 - Considered lumpsum payments and whether they fall under capital or trading receipts.