InFarnborough Airport Properties Company and Farnborough Properties Company v HMRC[2016] UKFTT 431 (17 June 2016), the FTT found that the appointment of a receiver had the effect of degrouping a company for group relief purposes.
The appellants and Piccadilly Hotels (PH) were 75% subsidiaries of another company. PH had surrendered losses to both appellants but HMRC considered that their two claims for group relief were not valid. PH had been placed in receivership and the issue was whether PH and the applicants had belonged to the same group for the purpose of CTA 2010 s 150. This depended on whether a third party had obtained control of PH but not of the appellants (CTA 2010 s 154(3)), as a result of the appointment of the receiver.
The FTT noted that the Pepper v Hart [1993] AC 593 criteria, which allow reference to parliamentary debate when interpreting legislation, were not met in this case as there had been no ‘clear statement directed to the matter in issue’. In any event, the degrouping of PH as a result of the appointment of a receiver was not an ‘absurd’ result justifying recourse to parliamentary material.
Finally, the FTT found that the entire affairs of PH had been put in the hands of the receiver, leaving no power to its shareholders and directors. The appellants and PH were therefore no longer under common control.
Why it matters: The FTT firmly rejected contentions that s 154 should be read narrowly, so as to disentitle a claimant company from group relief only where there had been some tax avoidance purpose.
InFarnborough Airport Properties Company and Farnborough Properties Company v HMRC[2016] UKFTT 431 (17 June 2016), the FTT found that the appointment of a receiver had the effect of degrouping a company for group relief purposes.
The appellants and Piccadilly Hotels (PH) were 75% subsidiaries of another company. PH had surrendered losses to both appellants but HMRC considered that their two claims for group relief were not valid. PH had been placed in receivership and the issue was whether PH and the applicants had belonged to the same group for the purpose of CTA 2010 s 150. This depended on whether a third party had obtained control of PH but not of the appellants (CTA 2010 s 154(3)), as a result of the appointment of the receiver.
The FTT noted that the Pepper v Hart [1993] AC 593 criteria, which allow reference to parliamentary debate when interpreting legislation, were not met in this case as there had been no ‘clear statement directed to the matter in issue’. In any event, the degrouping of PH as a result of the appointment of a receiver was not an ‘absurd’ result justifying recourse to parliamentary material.
Finally, the FTT found that the entire affairs of PH had been put in the hands of the receiver, leaving no power to its shareholders and directors. The appellants and PH were therefore no longer under common control.
Why it matters: The FTT firmly rejected contentions that s 154 should be read narrowly, so as to disentitle a claimant company from group relief only where there had been some tax avoidance purpose.
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