JTIAC reaches the Upper Tribunal: onward through the Slough of Despond, but for which purpose?
4 September 2023
Article | UK | Tax Journal | JTIAC | September 2023
Three observations can be made from the Upper Tribunal's judgment in JTIAC, in which the UT rejected the taxpayer's argument that the existence of a genuine commercial purpose precluded the operation of the unallowable purpose rule. First, while it is clearly right that the FTT must view evidence critically, it is questionable how far the the FTT should go - and whether, in the instant case, the FTT's construction of JTIAC's purpose was too 'aggressive'. Second, if the UT's decision ultimately stands, HMRC are likely to have widened the scope of the unallowable purpose rule by inferring that a 'group purpose' constitutes a 'main purpose'. Third, even in the light of HMRC's recently revised uidance, it remains difficult to determine where HMRC draws the line between what is acceptable and what is not - and, more generally, HMRC appears to be being given space to 'legislate by guidance' using criteria devoid of any statutory basis.
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First published in the September issue of Tax Journal.