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N Barnes v HMRC

In N Barnes v HMRC (TC00972 – 11 March) an individual (B) entered into a complex scheme devised by a firm of tax advisers which sought to take advantage of a perceived mismatch between the ‘accrued income’ legislation (originally contained in ICTA 1988 s 710 et seq) and the legislation governing the taxation of manufactured interest payments (originally contained in ICTA 1988 Sch 23A and subsequently re-enacted in ITA 2007 ss 578-580). He submitted a return claiming a deduction of £1 200 000. HMRC disallowed the claim and B appealed. The First-tier Tribunal reviewed the evidence in detail and dismissed the appeal. Judge Kempster observed that ‘it was accepted that each and every one of the transactions upon which (B) relied was part of a preordained series and that series had no purpose other than tax avoidance’. He held that ‘the end result taking each transaction...

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