Barnett, R (On the Application Of) v Inland Revenue

The statutory discretion to extend the reinvestment period under Taxation of Chargeable Gains Act 1992, section 152(3), belongs to the Board of Inland Revenue. General Commissioners cannot make findings which bind or dictate the Board’s exercise of that discretion. Published guidance may indicate the circumstances in which the Board will normally exercise its discretion, but it does not transfer the statutory power or necessarily interpret the Act. The Board must assess the relevant facts for itself, while taking the Commissioners’ decision into account. A decision not to extend time is subject to judicial review on ordinary public law grounds.

Mr Barnett sought judicial review of the Board of Inland Revenue’s decision refusing to extend the statutory period for obtaining roll-over relief from capital gains tax. The replacement property was acquired outside the three-year period in section 152(3) of the Taxation of Chargeable Gains Act 1992. The General Commissioners had found that he intended to acquire replacement assets and had been delayed by planning issues, but recognised that the discretion belonged to the Board. The Board reconsidered the matter and declined to extend time. The central issue was whether the Board was bound by the Commissioners’ factual findings when exercising its statutory discretion.

1. The claim was dismissed. The Board’s discretion under section 152(3) of the Taxation of Chargeable Gains Act 1992 was vested in the Board, not the General Commissioners. The Commissioners’ jurisdiction was to determine the taxpayer’s appeal against the assessment, including whether an unconditional acquisition contract had been entered into within the statutory period.

2. The General Commissioners had no power, by relying on regulation 15(2) of the General Commissioners (Jurisdiction and Procedure) Regulations 1994, to make findings intended to bind the Board in the exercise of its separate discretion. Such an approach would effectively dictate the result of the discretion.

3. The policy in CG60640 was an indication of the circumstances in which the Board would exercise its discretion in favour of a taxpayer. It was not an interpretation of section 152(3). The court distinguished the treatment of D24 in Steibelt (Inspector of Taxes) v Paling [1999] STC 594, where D24 had been treated, in obiter comments, as an explanation of the meaning of section 152(1).

4. The Commissioners’ limited findings did not establish that Mr Barnett had been prevented by circumstances beyond his control from acquiring replacement assets, or that such circumstances continued until acquisition. The Board was entitled to reach its own conclusions on the evidence and had properly directed itself by reference to CG60640.

5. The Board had considered the entirety of the Commissioners’ decision. Its decision was neither unlawful nor unreasonable in the public law sense. A decision under section 152(3) could in principle be challenged by judicial review, but no proper public law ground was established.