[2011] UKFTT  149 (TC)

TC01023

Appeal number: TC/2010/01073

ASSESSMENT - CAPITAL GAINS TAX – transfer of interests in partnerships – did the interests  belong to the Appellant or a limited company – the Appellant – Appeal dismissed 

FIRST-TIER TRIBUNAL

TAX 

	MARTIN JONES	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: MICHAEL TILDESLEY OBE (TRIBUNAL JUDGE)
				JOHN AGBOOLA FCCA

Sitting in public at 1st Floor Ashford House, County Square Shopping Centre, Ashford, Kent TN23 1YB on 7 October 2010

Appellant appeared in person

Mrs Christine Cowan of the Appeals and Review Unit for HMRC

© CROWN COPYRIGHT 2011

DECISION

Preface
The Tribunal heard this Appeal separately but on the same day as Appeal number TC2009/15067 involving the Appellant, which was allowed. On 7 October 2010 after hearing the evidence in both Appeals the Tribunal announced its decision in the Appeals giving brief reasons. The Tribunal subsequently released a written summary of its findings and reasons on the 20 October 2010. The parties, however, were not supplied with the summary until January 2011. The Appellant has requested the Tribunal to provide full findings of fact and reasons for its decision. The Tribunal has reviewed the summary decision released on 20 October 2011 and is satisfied that it constitutes the full decision which is set out below.
The Appeal
1.	The Appellant was appealing against a discovery assessment dated 20 February 2009 in the sum of ₤30,600 for the year 2001/02. 
2.	The disputed issue concerned a chargeable gain arising from the transfer of interests in partnerships known as Abacus Insurance Services and Moreland Jones Insurance Services in the sum of ₤84,000 during 2001/02.
3.	The Appellant contended that Eve Consultants Limited owned the interests in the said partnerships and made the capital gain. HMRC disagreed  submitting that it was the Appellant who transferred his interests in the partnerships for ₤84,000
 Findings of Fact and Reasons
4.	In 1992 the Appellant with Mr Moreland formed the partnership, Moreland Jones Insurance Services. In 1995 the Appellant, Mr Moreland and Mr Prophet commenced trading in partnership known as Abacus Insurance Services.
5.	In the final period to 31 January 2001 a limited company was formed for each of the partners in Moreland Jones Insurance Services and Abacus Insurance Services. The companies were DMIP Consultants Limited for Mr Prophet; MJM Consultants Limited for Mr Moreland and Eve Consultants Limited for Martin Jones (the Appellant). 
6.	On 5 March 2002 the Appellant signed in his own name an agreement in which Mr Moreland purchased the Appellant’s shares of the businesses known as Abacus Insurance Services and Moreland Jones Services for the purchase price of ₤84,000 payable by 12 monthly instalments of ₤4,000 then 12 monthly instalments of ₤3,000.
7.	The Appellant stated that he signed the agreement on behalf of Eve Consultants Limited but there was no documentary evidence to substantiate his statement.
8.	The Appellant asserted that there was in existence a written agreement in which he had transferred his interests in the said partnerships to Eve Consultants Limited. The Appellant did not adduce in evidence a copy of this written agreement. The Tribunal considered that the Appellant had been given sufficient opportunity and time to compile the necessary evidence to substantiate his case. Finally the Tribunal concluded on the evidence before it that there were no agreements introducing the limited companies set up by the partners into the said partnerships and that there was no evidence that the limited companies were trading in partnership. 
9.	The Tribunal was not convinced with the Appellant’s explanation that Eve Consultants Limited had been established to protect his brother’s investment in the partnerships. The more likely explanation from the evidence before the Tribunal for the setting up of Eve Consultants Limited and the other companies for Mr Moreland and Mr Prophet was to enable the individual partners to avoid paying tax at the higher rate.
10.	The Tribunal placed no weight on the fact that the proceeds under the transfer agreement were paid into the bank account of Eve Consultants Limited. 
11.	The Tribunal concluded that the terms of the agreement on 5 March 2002 were unambiguous. The Appellant’s evidence did not undermine the clear wording of the agreement which demonstrated that the Appellant received ₤84,000 for the sale of his interests in the partnerships known as Abacus Insurance Services and Moreland Jones Insurance Services.
12.	The Appellant answered No to the question Did you dispose of other chargeable assets worth more than ₤15,000 in total in his 2001/02 tax return.  The Tribunal was satisfied that the Appellant’s failure to declare the gain from the sale of his interests in the said partnerships  was attributable to his negligent conduct   
Decision
13.	The Tribunal decides that the time limit for making the assessment was 20 years from the 31 January next following 2001/02.
14.	The Tribunal finds that the Appellant made a capital gain in 2001/02 from the sale of partnership interests pursuant to section 59 of the Taxation of Chargeable Gains Act 1992. The quantum of the chargeable gain was ₤76,500 (₤84,000 - ₤7,500).
15.	The Tribunal confirms the assessment in the sum of ₤30,600 for the year 2001/02.
16.	The Appeal is dismissed.
17.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

MICHAEL TILDESLEY OBE
TRIBUNAL JUDGE
RELEASE DATE: 2 MARCH 2011