Underwood v Revenue & Customs

For a second appeal, permission depends on satisfying the threshold in CPR 52.13. An issue being interesting or suitable for a moot is insufficient by itself. The threshold may nevertheless be crossed where the proposed appeal raises an issue of important relevance beyond unusual facts. In capital gains tax proceedings, Taxation of Capital Gains Act 1992, section 28 operates as a timing provision: a disposal and acquisition under a contract are treated as occurring when the contract is made, rather than when the asset is conveyed or transferred.

The appellant sought to set capital gains against a loss arising from the sale of land under a contract. The land was later repurchased through connected contractual arrangements and sold onward. The Special Commissioners dismissed his appeals. Briggs J dismissed the appeal, concluding that the relevant contracts had been abandoned and that no beneficial interest had passed to the purchaser: [2008] EWHC 108 (Ch).

After permission was refused on the papers, the appellant renewed his application before the Court of Appeal. The proposed appeal raised whether set-off could constitute payment, whether the contracts had been performed, whether a beneficial interest had passed, and whether there had been a disposal for the purposes of section 28.

The renewed application for permission to appeal was granted.

1. Second appeal threshold. The proposed appeal was a second appeal, so permission ought only to be given if the threshold in CPR 52.13 was crossed. The court treated this as the governing procedural requirement.
2. Arguability and wider significance. The fact that the issues were unusual and intellectually interesting, or that they would make an ideal moot, was insufficient by itself. The appellant nevertheless had a good arguable case that, for capital gains tax purposes, set-off could be treated as equivalent to actual payment under the reciprocal contracts. It was also arguable that the transactions represented performance of the contracts rather than their abandonment.
3. Capital gains tax issue. Section 28 of the Taxation of Capital Gains Act 1992 was described as a timing provision. It applies when an asset is disposed of and acquired under a contract, deeming the disposal and acquisition to occur when the contract is made rather than when the asset is conveyed or transferred. The central proposed appeal concerned whether that statutory condition was met, including whether the purchaser obtained a beneficial interest.
4. Wider relevance. Although the facts were unusual, determination of the meaning of disposal in capital gains taxation and its application to the transactions was likely to have important relevance beyond the present case. That wider significance justified permission. The order was: application granted.

1. Court of Appeal (Civil Division): On a renewed application, permission to appeal was granted: [2008] EWCA Civ 964.
2. High Court, Chancery Division: Briggs J dismissed the appellant’s appeal against the decision of the Special Commissioners: [2008] EWHC 108 (Ch).
3. Special Commissioners: The appellant’s appeals against the capital gains tax assessments were dismissed on 16 May 2007. No citation is stated in the judgment.