N Barnes v HMRC

In N Barnes v HMRC (Upper Tribunal – 6 August) 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 Upper Tribunal dismissed his appeal holding that the securities which B had borrowed as part of the scheme were within TCGA 1992 s 263B so that B failed to qualify for relief under the ‘accrued income’ legislation. The Upper Tribunal also upheld the First-tier decision that even if the transfers of...