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No Property Development Trade = No Tax Relief

In Hopscotch Ltd v HMRC [2020] UKUT 0294 (TCC), the Upper Tribunal held that, as the appellant was not carrying on a trade, it was not carrying on a property development trade for the purposes of ATED. The tribunal therefore upheld the First-tier Tribunal’s decision that relief from ATED was unavailable.

The Upper Tribunal has upheld a decision of the First-tier Tribunal (FTT) that relief from the annual tax on enveloped dwellings (ATED) was not available for a property redevelopment because the redevelopment did not constitute a property development trade.

In the tribunal’s view, the FTT’s two-stage approach of considering first, whether there was a trade, and secondly, if a trade existed, whether there was a property development trade, was correct. By necessity, there could only be a property development trade if a trade existed under general principles; as the tribunal agreed with the FTT that one did not, there could be no property development trade.

The tribunal also rejected the appellant’s other arguments; although these were not (in the tribunal’s view) clearly articulated, they amounted to suggestions that the FTT had failed to make primary findings of fact, failed to correctly evaluate the findings of facts and made a decision that no reasonable tribunal could have made, based on those facts. The tribunal identified no shortcomings in the FTT’s approach and no evidence that suggested its conclusions were wrong.

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 (Source: Legal update: case report | Published on 10-Nov-2020 | by Practical Law Tax)