TAXtv: Beware Patmore’s can of worms
Lecturer and TAXtv presenter Tim Good warned practitioners this month about unwelcome complications arising from the recent HMRC v Patmore tribunal decision.
In TAXtv’s September episode, Good looks in some detail at what he calls the “extraordinary” decision of Judge Barbara Mosedale in the case.
After recapping the outline of the case, in which Mr and Mrs Patmore took out mortgages to buy a business and dividends were paid to the wife on her 10% holding of B shares, Good warned advisers not to buy the line that it was a “defeat” for HMRC.
The judge’s decision was based on three components: a rejection of HRMC’s argument that the way the shares were held amounted to a S660a settlement, and of the department’s contention that the arrangement included an element of bounty. There was no evidence of bounty, Good noted, because of the consideration Mrs Patmore had given via the loan agreements. But because of those agreements, the judge also disagreed with the Patmores’ adviser that the arrangement was commercial.
The judge’s deliberations on the nature of the shareholding arrangement will cause considerable difficulty for advisers, Good warned.
Tim Good’s full analysis, along with updates on decisions in the Banerjee, PA Holdings and Lord Balfour cases are available in September’s 40-minute TAXtv episode – click here for subscription details.