The Commissioners for HMRC v GCH Corporation Limited & Ors

For Taxation of Chargeable Gains Act 1992, section 59A(1), business has its ordinary commercial meaning, is wider than trade and may include investment activity carried on commercially. Whether an LLP carries on a business depends on its actual activity in statutory context. Its stated purpose and activity in pursuit of that purpose are relevant, but do not create a presumption that it is in business. Under section 29 of the Taxes Management Act 1970, a discovery may arise when it newly appears for any reason that a taxpayer has been undercharged; discovery that an earlier closure notice was invalid can suffice. A respondent needs permission to appeal only when its argument seeks a different FTT decision.

HMRC appealed after the First-tier Tribunal allowed the Company’s and LLP’s appeals against closure notices and the Trusts’ appeals against discovery assessments. The Company and three Trusts had been members of the LLP when they transferred loan notes to it shortly before its liquidation. The FTT held that the LLP carried on a business with a view to profit at the relevant time, so section 59A(1) of the Taxation of Chargeable Gains Act 1992 applied.

HMRC challenged the meaning and application of “business” and the FTT’s reasoning on the view-to-profit requirement. The respondents challenged the FTT’s finding that the LLP was not trading and its conclusion that the discovery assessments were valid. The Upper Tribunal also had to decide whether the Trusts needed permission to raise their procedural arguments in a respondents’ notice.

1. The Upper Tribunal dismissed HMRC’s appeal on the business issue, the Trusts’ challenge to the discovery assessments and the respondents’ cross-appeal on trading. The FTT’s decision allowing the taxpayer appeals therefore stood.

2. Permission was not required for the Trusts’ procedural arguments. Under section 11 of the Tribunal, Courts and Enforcement Act 2007 and rule 24 of the Tribunal Procedure (Upper Tribunal) Rules 2008, the question is whether the respondent seeks a different FTT decision. The FTT’s decision was that the assessments overstated the taxpayers’ liabilities. The Trusts’ alternative arguments, if successful, would have supported the same result.

3. The FTT was entitled to find that an HMRC officer made a discovery for section 29 of the Taxes Management Act 1970. The evidence supported its finding that the officer independently reviewed the transactions and concluded that gains had not been assessed. The contemporaneous documents did not compel a contrary conclusion. Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) gives guidance on weighing oral and documentary evidence, not an absolute rule that documents prevail.

   A discovery is not limited to newly discovered facts. The wording can cover a case in which it newly appears for any reason that a taxpayer was undercharged: Cenlon Finance Co Ltd v Ellwood [1962] AC 782. Even if the only new matter had been that the earlier closure notices were invalid, that could amount to a discovery.

4. In section 59A(1) of the Taxation of Chargeable Gains Act 1992, “business” is broader than “trade” and takes its ordinary commercial meaning. It can include investment activity carried on commercially. The meaning depends on statutory context. The approach in Rashid v Garcia (Status Inspector) SpC 348, concerning a different statutory context, did not govern.

5. There is no rule that an LLP is carrying on a business merely because it was formed for a business purpose and undertakes activities in pursuit of it. Purpose and activity are relevant to the overall assessment, and the level of activity required depends on the nature of the business. The FTT was entitled to find that this LLP’s share transactions and Mr Hutchings’s investment research amounted to a business, notwithstanding the tax-mitigation purpose of its later transactions.

6. The view-to-profit requirement is subjective: there must be a genuine purpose to earn profit, but it need not be the sole or main purpose. Profit is assessed objectively, and no minimum amount is required. The FTT found both an intention to profit and actual profit, and gave adequate reasons for its conclusion, applying the approach in Ingenious Games and others v HMRC [2021] EWCA Civ 1180.

7. Whether activities amount to a trade is a multifactorial question. The badges of trade are indicators, not decisive rules, and the circumstances must be considered as a whole. The FTT directed itself correctly and its evaluative conclusion was not irrational or plainly wrong in law. The Upper Tribunal had no basis to disturb it.

• Upper Tribunal (Tax and Chancery Chamber) [2026] UKUT 219 (TCC) : dismissed HMRC’s appeal and the respondents’ cross-appeals.
• First-tier Tribunal (Tax Chamber) [2024] UKFTT 00922 (TC), also reported at [2025] SFTD 661: allowed the taxpayer appeals after finding that the LLP carried on a business with a view to profit under section 59A(1) of the Taxation of Chargeable Gains Act 1992.