The Supreme Court has found in favour of HMRC in the Cotter case, overturning the previous decision of the Court of Appeal. As noted by Smith & Williamson, in considering the issues the Supreme Court ‘has drawn a distinction between a situation where a taxpayer submits a return by 31 October following the tax year (where HMRC is not obliged to give effect to a free standing claim that is to be applied to that year but is submitted after the return) and a return submitted by 31 January following the tax year (where the taxpayer is required to compute the liability and a subsequent amendment to that return by the taxpayer should be given effect by HMRC unless HMRC corrects the calculation to remove its effect and the taxpayer does not object).’
HMRC said in a statement: ‘In an important ruling that will save the UK around £60m, rising to £500m for similar cases, the Supreme Court has ruled unanimously that HMRC is entitled to enforce payment of a tax debt and withhold tax relief arising from an avoidance scheme while enquiring into the scheme.
‘Around 200 users of this particular scheme may be affected by the Supreme Court’s decision. HMRC welcomes the Supreme Court decision as a significant deterrent against the “cash flow” advantages which could otherwise be open to users of personal tax avoidance schemes.’
The Supreme Court has found in favour of HMRC in the Cotter case, overturning the previous decision of the Court of Appeal. As noted by Smith & Williamson, in considering the issues the Supreme Court ‘has drawn a distinction between a situation where a taxpayer submits a return by 31 October following the tax year (where HMRC is not obliged to give effect to a free standing claim that is to be applied to that year but is submitted after the return) and a return submitted by 31 January following the tax year (where the taxpayer is required to compute the liability and a subsequent amendment to that return by the taxpayer should be given effect by HMRC unless HMRC corrects the calculation to remove its effect and the taxpayer does not object).’
HMRC said in a statement: ‘In an important ruling that will save the UK around £60m, rising to £500m for similar cases, the Supreme Court has ruled unanimously that HMRC is entitled to enforce payment of a tax debt and withhold tax relief arising from an avoidance scheme while enquiring into the scheme.
‘Around 200 users of this particular scheme may be affected by the Supreme Court’s decision. HMRC welcomes the Supreme Court decision as a significant deterrent against the “cash flow” advantages which could otherwise be open to users of personal tax avoidance schemes.’
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