“ G LL B VK In te rnat iona le r I mm obilien Spez ia l f on d s iii-BVK Europa Immobilien Spezialfonds Claim for overpayment relief – tax years ended5 April 2010 , 2011, 2012 and 2013”
“We hereby give notice of a claim under Schedule 1AB TMA 1970, for relief from the overpayment of income tax suffered by each of the entities named above under the Non Resident Landlord scheme in the tax years ended5 April 2010 , 2011, 2012 and 2013. In total,£1,719,337 of income tax was suffered under the scheme and paid to HMRC by iii-BVK Europa Immobilien Spezialfond and£4,653,798 was suffered by GLL BVK Internationaler Immobilien Spezialfonds. A further breakdown of these amounts can be found in Appendix 1.”
“Bayerische currently invests in UK real estate indirectly through its 100% holding in a German fund, BARCHV-Masterfund (‘Masterfund’), which in turn has a c.14% holding in iii-BVK and a c. 17% holding in GLL (the exact percentages held by Masterfund in each year can be found in Appendix 1). The remaining units in iii-BVK and GLL are held by 15 other similar masterfund and pension scheme vehicles. As such this claim is only in respect of the proportion of profits in iii-BVK and GLL that are attributable to Masterfund (see Appendix 1).”
“On the basis that Bayerische is a German Pension Fund that is equivalent to a qualifying UK pension fund, we consider that EU law that sets out the equal treatment of entities regardless of residence should be applied to Bayerische. Consequently we believe that Bayerische should be taxed in the same manner as a UK pension fund, with any investment income received being exempt from UK tax. Notwithstanding any arrangements entered into for tax management purposes we consider that the Funds and Masterfund are tax transparent entities for UK income tax purposes and therefore the relevant allocation of profits (as detailed in Appendix 1) arising for the UK real estate assets held directly by the Funds should be taxed in the hands of Bayerische and therefore the tax suffered by the Fund [sic] on this amount of profit should be repaid.”
“the investors approve the alteration of the ‘general and special fund rules’…the fifth agreement herewith agreed takes effect at the same time and replaces the prior version…as well as the side-letter dated16 February 2012 .”
“We are writing to appeal against the conclusions of the Closure Notices refusing GLL’s claims for overpayment of income tax for the relevant periods totalling£767,190 being: ·£276,989 for the year ended5 April 2010 ·£213,248 for the year ended5 April 2011 ·£160,804 for the year ended5 April 2012 ·£116,149 for the year ended5 April 2013 .”
“I have read all the correspondence relating to this matter between your representative in this matter, KPMG, and HMRC, in particular the arguments put forward by KPMG in letters dated6/8/2013 ,27/2/2014 ,5/10/2014 and7/4/2017 …”
“The background to and basis of the claim is set out at length in the correspondence between the parties (appended to the Notice of Appeal). These grounds of appeal should therefore, be read in conjunction with that correspondence and in particular with the letters of6 August 2013 ,27 February 2014 ,28 February 2014 and7 April 2017 .”
“seeking to challenge (and obtain repayment of) income tax accounted for under self-assessment of : · for GLL, in the sum of£767,190 for the years ending on5 April 2010 -2013;… · for iii-BVK, in the sum of£237,634 for the years ending on5 April 2010 -2013”
“we are writing to request written confirmation from the Respondent’s representatives that they agree with the Appellants’ understanding for the full value existing claims which are under appeal…to recap, the Appellants’ original claim letter…indicates that the Appellants seek to recover the tax paid on the income attributable to all the investing pension funds. However, at the time these claims were submitted to both GLL and iii-BVK, BARCHV was the only pension fund for which a particularised calculation could be made illustrating the attributable portion of the total tax suffered. Given that the claim relates to all of the 14 pension funds that invested in the Appellants, through their respective Masterfonds (of which there are 16 in total) during the tax years which are under appeal…the Appellants intend to include the relevant documentation for each of these funds (see the enclosed table for details of the names of each of the pension funds, their respective Masterfonds and the dates of investment. …As set out the Appellants’ claim letter dated28 February 2014 , GLL claims repayment of£4,653,798 and iii-BVK claims repayment of£1,719 , 337… …the analysis in the Claim Letter under the heading ‘summary of claim’ is equally applicable to the remaining pension funds (and their respective Masterfonds) which were known to be in a position similar to BARCHV. it follows that it is also clear from this section that the claims are for the full amounts of tax suffered, albeit not fully particularised…”
“(1) This paragraph applies where: (a) a person has paid an amount by way of income tax or capital gains tax but the person believes that the tax was not due… (2) The person may make a claim to the Commissioners for repayment or discharge of the amount. (3) … (4) Paragraphs 3 to 7 (and sections 42 to 43C and Schedule 1A) make further provision about making and giving effect to claims under this Schedule.”
“(1) A claim under this Schedule may not be made more than 4 years after the end of the relevant tax year. (2) In relation to a claim made in reliance on paragraph 1(1)(a), the relevant tax year is: (a) … (b) …the tax year in respect of which the payment was made.”
“(1) Where any provision of the Taxes Acts provides for relief to be given, or any other thing to be done, on the making of a claim, this section shall, unless otherwise provided, have effect in relation to the claim. (1A) Subject to subjection (3) below, a claim for relief, an allowance or a repayment of tax shall be for an amount which is quantified at the time when the claim is made. … (9) Where a claim has been made (whether by being included in a return under section 8, 8A, 4 or 12AA of this Act or otherwise) and the claimant subsequently discovers that an error or mistake has been made in the claim, the claimant may make a supplementary claim within the time allowed for making the original claim. … (11) Schedule 1A to this Act shall apply as respects any claim or election which (a) is made otherwise than by being included in a return under section 8, 8A, 12ZB or 12AA of this Act.”
“When interpreting an agreement, the court must have regard to the words used, to the provisions of the agreement as whole, to the surrounding circumstances in so far as they were known to both parties, and to commercial common sense…”
“The remaining units in iii-BVK and GLL are held by 15 other similar masterfund and pension scheme vehicles. As such this claim is only in respect of the proportion of profits in iii-BVK and GLL that are attributable to Masterfund (see Appendix 1)”
“(1) An assessment or determination, warrant or other proceeding which purports to be made in pursuance of any provision of the Taxes Acts shall not be quashed, or deemed to be void or voidable, for want of form, or be affected by reason of a mistake, defect or omission therein, if the same is in substance and effect in conformity with or according to the intent and meaning of the Taxes Acts, and if the person or property charged or intended to be charged or affected thereby is designated therein according to common intent and understanding. (2) An assessment or determination shall not be impeached or affected: (a) by reason of a mistake therein as to (i) the name or surname of a person liable, or (ii) the description of any profits or property, or (iii) the amount of the tax charged, or (b) by reason of any variance between the notice and the assessment or determination.”
“The force of the words 'any variance' is that no variance of any description between the notice and the determination is to invalidate the determination. I accept that there may come a stage where the error or discrepancy in question is so fundamental in character that it could not properly be described as a 'variance' at all; but in my judgment a mistake about dates of the type made in the present case gives rise to a 'variance' within the ordinary and natural meaning of that word.”
“Although the period was not stated, it could be worked out without difficulty…Mr Donaldson could have been in no doubt as to the period over which he had incurred a liability for daily penalty. He knew that the start date for the period of daily penalty was1 February 2012 and the notice of assessment told him that the end date of the period was 90 days later. The omission of the period from the notice was, therefore, one of form and not substance. Mr Donaldson was not misled or confused by the omission. The effect of section 114(1) is that the omission does not affect the validity of the notice.”
“Although this passage is worded in terms that might suggest that the question was whether Mr Donaldson himself was misled, the test under s 114 must be an objective one: see Pipe v HMRC at [51]. However, in applying an objective test the reader of the closure notice must, I think, be taken to be equipped with the knowledge that Mr Archer and KPMG had, including knowledge of what had led to the enquiry and what HMRC's conclusions were…”
“applying the test in Donaldson , Mr Archer's liability could have been easily worked out, and he can have been in no doubt what he owed HMRC. He had in addition been informed by the APNs what HMRC asserted was his liability. He could not have been confused or misled. KPMG themselves had said in support of their application to the FTT that there was no amount of tax for 2001/2 which remained uncertain. HMRC's omission to amend his return to accord with their conclusions was, in my judgment, a matter of form rather than substance on the particular facts of this case. I would hold, therefore, that the closure notices were validated by s 114.”
“(1) Subject to the provisions of the 2007 Act and any other enactment, the Tribunal may regulate its own procedure. (2) The Tribunal may give a direction in relation to the conduct or disposal of proceedings at any time, including a direction amending, suspending or setting aside an earlier direction.
“[32] The FTT approached the question of whether a further demand is an amendment to an existing claim by adopting the test of whether it was shown to be ‘in essence as one with an earlier claim’: para [110]. In my judgment, there is nothing wrong with this test, but I am not sure it advances the matter significantly, and I do not think it is appropriate to add a gloss to the statutory wording. The FTT proceeded to hold as follows: ‘[111] That test, in our view, will be satisfied only if the later claim arises out of the same subject matter as the original claim, without extension to facts and circumstances that fall outside the contemplation of the earlier claim. Without deciding matters outside of this appeal, we consider, for example, that this would generally include cases where a particular computation was not made at the time of the original claim, but the subject matter of the claim was sufficiently identified for such a calculation made subsequently to be related back to the original claim. Simple calculation errors would similarly be included. It should also cover, we think, cases where particular items within the category of the subject matter of the original claim are unknown or not fully identified at the time of the original claim, and would but for that fact have been included in the original claim, but only subsequently come to light.’ [33] If subsequent to the submission of a claim, the taxpayer sends in the correction of a mistake, whether that be an arithmetical error or through the omission of some supplies that were clearly intended to be included, then I consider that would clearly not be a new claim but an amendment. Further, if the taxpayer making a claim says that he is not yet able to calculate the full figures and gather all the documentation as required by reg 37, but is in the course of doing so and will provide such further details as soon as possible, such further submission would not constitute a new claim but fall within the scope of the existing claim. Thus I consider that what is an amendment is very much a question of fact and degree, judged by the particular circumstances. I therefore respectfully agree with the test set out by the FTT in the first sentence of para [111]. However, of the examples given in that paragraph, I would not wish to approve in the abstract the final example: that would be for consideration on the particular facts of the case should it arise. … [38] Mr Peacock gave the example of a claim for a particular accounting period in respect of supplies in London, where the taxpayer subsequently wrote to ask for repayment in respect of supplies made for the same accounting period in the rest of England. However, in my judgment, unless there was some express reservation in the initial claim of the kind that I have indicated, the later request would clearly constitute a separate claim. So also if Reed initially sought to claim reimbursement of allegedly overpaid VAT only for its placement services in the healthcare sector, and subsequently made a demand for repayment as regards another part of its business, notwithstanding that this was for the same accounting period and arising out of the same error.”
“[57] The essence of the conclusion of Roth J in Reed Employment was that a claim could be amended, even if the amendment consisted of a change in the amount claimed or the method of calculation, as long as the fundamental character of the claim was unchanged: in other words, the amended claim had to arise out of essentially the same facts or circumstances as the original claim. The examples Roth J gave in that case, at para [33], were of the correction of an arithmetical mistake or the addition of an element of claim which the taxpayer had plainly intended to include but which, by mistake, he had omitted. Those examples are consistent with our own conclusion that it is the amount and the method of calculation which define the claim; amendments of that kind do not alter its fundamental character. Nothing Roth J said limited the permissible amendments to those which did not increase the amount of the claim, and we respectfully agree with him on that point; once it is accepted that amendment is possible, there is no logical reason for a restriction of that kind. Indeed, one of the examples he gave might result in an increase in the overall amount of the claim, and the second almost inevitably would do so. [58] By contrast, the example of an impermissible amendment he gave at para [38] was of the addition of a further claim arising out of similar but not the same circumstances. The reason why the taxpayer was unsuccessful in that case was not because of an amendment of the calculation, nor because the amendment, if allowed, would increase the value of the claim, but because it was attempting to add what was in reality a separate claim. Again, we agree with Roth J's reasoning and with his conclusion.”
“(6) If, on an appeal notified to the tribunal, the tribunal decides (a) that the appellant is overcharged by a self-assessment; (b) … or (c) that the appellant is overcharged by an assessment other than a self-assessment, the assessment or amounts shall be reduced accordingly, but otherwise the assessment or statement shall stand good. (7) If, on an appeal notified to the tribunal, the tribunal decides (a) that the appellant is undercharged to tax by a self-assessment (b) …or (c) that the appellant is undercharged by an assessment other than a self-assessment, the assessment or amounts shall be increased accordingly. (7A) If, on an appeal notified to the tribunal, the tribunal decides that a claim or election which was the subject of a decision contained in a closure notice under section 28A of this Act should have been allowed or disallowed to an extent different from that specified in the notice, the claim or election shall be allowed or disallowed accordingly to the extent that the tribunal decides is appropriate, but otherwise the decision in the notice shall stand good.”
“(1) An enquiry under paragraph 5 above is completed when an officer of the Board by notice (a ‘closure notice’) informs the claimant that he has completed his enquiries and states his conclusions. (2) In the case of a claim for discharge or repayment of tax, the closure notice must either (a) state that in the officer's opinion no amendment of the claim is required, or (b) if in the officer's opinion the claim is insufficient or excessive, amend the claim so as to make good or eliminate the deficiency or excess… (3) In the case of a claim that is not a claim for discharge or repayment of tax, the closure notice must either (a) allow the claim, or (b) disallow the claim, wholly or to such extent as appears to the officer appropriate.”
“There is a venerable principle of tax law to the general effect that there is a public interest in taxpayers paying the correct amount of tax, and it is one of the duties of the Commissioners in exercise of their statutory functions to have regard to that public interest.”
“[ 162] …s 50(6)(a) must be given a broad interpretation as the policy is that a taxpayer should only pay the correct amount of tax [163] What is that broad interpretation? It seems right that if HMRC put the correctness of one aspect of a tax return in issue, they must accept that the taxpayer can counter by proving (if he can) that another aspect of the same tax return was unduly favourable to HMRC, even if the taxpayer would be out of time to make a stand-alone correction under s 9ZA. That must be especially the case here, where the dividends and benefit in kind were an issue in the appeal in any event, at least in respect of 2010 and 2011.”
“Given the general principle to which Henderson J referred, we consider that section 50(6) and (7) should be construed, insofar as their language sensibly allows, so as enable the FTT to amend a self-assessment return to give effect to the decision which they have made in relation to an appeal which is properly before them . In the present case, it was within the appellate jurisdiction of the FTT to make the decisions of fact which it did since those findings were made in an appeal ‘against... any conclusion stated or amendment made by a closure notice under section 28A ’. It would, as we see it, be a surprising result if the FTT were then unable to give effect to its findings by amending the return.”
“[Counsel for the appellant said] that [s 50(6) TMA] meant that the [general] commissioners could reduce the assessment before them if they were satisfied that the taxpayer company had been overcharged on some other occasion, in this case the 1979 and 1980 assessments. But that is not how I read the section. It says that if the appellant is overcharged by any assessment the assessment shall be reduced accordingly . In my judgment, the only assessment that can be reduced is the assessment in respect of which the commissioners think that the taxpayer has been overcharged . As I have said, it was no longer open to the commissioners to reduce the 1979 or 1980 assessments. In any event, there was no appeal against those assessments before them. They were not entitled on account of their views about those assessments to reduce the assessment against which the appeal had actually been brought . The result is that in my judgment the commissioners thereby erred in law and the appeal must be allowed.”
“It might be said that the only issue before the Tribunal for 2008 and 2009 is the validity of the amendments which HMRC made to the appellant's self assessments for those years, and therefore, while the Tribunal could reduce those amendments to nil, it cannot go further and reduce the self assessments. But we think that is to give s 50(6) an unduly narrow reading: it refers to whether ‘the appellant is overcharged by a self-assessment’. For each of 2008 and 2009 only one assessment is in issue, which is the appellant's self assessment as subsequently amended by HMRC. By amending that self assessment, HMRC put the entire self-assessment within the jurisdiction of the Tribunal.”
“If, on an appeal notified to the tribunal, the tribunal decides that a claim…which was the subject of a decision contained in a closure notice…should have been allowed …to an extent different from that specified in the notice, the claim…shall be allowed…accordingly to the extent…appropriate…”