Caleb Brandon Halstead v The Commissioners for HMRC

On 19 January 2023, the respondents (“HMRC”) made an application for strike out of Mr Halstead’s appeal pursuant to Rules 8(2) and 8(3)(c) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (as amended) ("the Rules"). I annex a copy of those Rules at Appendix 1.

On 12 September 2022, Mr Halstead had filed an appeal online seeking repayment of Stamp Duty Land Tax (“SDLT”) in a total of £20,300. He and his wife had purchased a property in 2016 (“the First Property”) and another property in 2018 (“the Second Property”). They had paid SDLT of £7,500 and £12,800 respectively. In summary, he argued that the SDLT had been “improperly charged” and he sought repayment on the basis that he had “tax-exempt status as a member of the US Visiting Forces”.

I had the benefit of a hearing bundle extending to 524 pages which included the strike-out application upon which HMRC relied as a Skeleton Argument.

With the consent of the parties, the hearing was conducted by video link using the Tribunal's video hearing system. Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

I set out the facts, including the history of the arguments deployed, at length since, from the outset, Mr Halstead had made it explicit that he wished this appeal to be escalated to the highest level.

The primary function of the Tribunal is to find the facts and then to apply the law. Although I refer to the law in the body of this decision, at Appendix 2, I annex the text of the legislative and other provisions that are relevant to the arguments advanced in this matter.

The Tribunal is a creature of statute law and its jurisdiction is circumscribed by that law. In relation to strike-out applications, that jurisdiction is found in Rule 8 of the Rules. If the Tribunal lacks jurisdiction, in terms of Rule 8(2) it must strike out the proceedings. That is a binary decision, which the Tribunal must address and determine at the hearing of the strike-out application.

In this appeal, HMRC seek strike out of the appeal in relation to the First Property in terms of Rule 8(2).

This is to be contrasted with an application to strike out a claim, or part of it, on the grounds that it has no reasonable prospect of success. In the latter case, the Tribunal will not exercise its discretion to strike out if there is a non-fanciful argument in support of the claim, or relevant part.

HMRC seek strike out of the appeal in terms of Rule 8(2) of the Rules in respect of the First Property on the basis that the Tribunal has no jurisdiction. HMRC also seeks strike out of the appeals for both properties in terms of Rule 8(3)(c) of the Rules.

Mr Winter argued that the leading case giving guidance on Rule 8(3)(c) is Fairford Group v HMRC [2014] UKUT 329 (TCC) (“Fairford”) where the Tribunal found at paragraph 41 that:-

“In our judgment an application to strike out in the FTT under r 8(3)(c) should be considered in a similar way to an application under CPR 3.4 in civil proceedings (whilst recognising that there is no equivalent jurisdiction in the FTT Rules to summary judgment under Pt 24). The tribunal must consider whether there is a realistic, as opposed to a fanciful (in the sense of it being entirely without substance), prospect of succeeding on the issue at a full hearing, see Swain v Hillman [2001] 1 All ER 91 and Three Rivers [2000] 3 All ER 1 at [95], [2003] 2 AC 1 per Lord Hope of Craighead. A 'realistic' prospect of success is one that carries some degree of conviction and not one that is merely arguable… The tribunal must avoid conducting a 'mini-trial'. As Lord Hope observed in Three Rivers, the strike out procedure is to deal with cases that are not fit for a full hearing at all.”

Mr Halstead also relied on that quotation, arguing in particular that there should be no mini-trial and that there should be a full hearing.

Although Fairford is relevant, the Upper Tribunal in The First De Sales Ltd & Others v HMRC [2018] UKUT 396 (TCC) (“De Sales”), to which I was not referred, approved that quotation from Fairford at paragraph 31 of its decision but went on to say:

“32.

It was common ground that the application should be considered in a similar way to an application under CPR 3.4 in civil proceedings (whilst recognising that there is no equivalent jurisdiction in the FTT Rules to summary judgment under Part 24).

33.

Although the summary in Fairford Group Plc is very helpful, we prefer to apply the more detailed statement of principles in respect of application for summary judgment set out by Lewison J, as he then was, in Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]. This was subsequently approved by the Court of Appeal in AC Ward & Sons v Caitlin Five Limited [2009] EWCA Civ 1098. The parties to this appeal did not suggest that any of these principles were inapplicable to strike out applications.

“i)

The court must consider whether the claimant has a ‘realistic’ as opposed to a "fanciful’ prospect of success: Swain v Hillman [2001] 1 All ER 91

ii)

A ‘realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]

iii)

In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman

iv)

This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v)

However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;

vi)

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

I adopt that approach.

Until his recent retirement, Mr Halstead was a Lt. Col. in the U.S. Air Force. He remains Senior Legal Counsel as part of the civilian deployment. He has been a member of the U.S. Visiting Forces assigned in the United Kingdom since 2015.

He and his wife purchased the First Property with an effective date of 8 February 2016. The relevant SDLT return was filed with HMRC on 8 February 2016, albeit in terms of section 76(1) Finance Act 2003 (“FA 03”), and paragraph 2 Schedule 10 FA 03 the last day within which the return had to be delivered was 9 March 2016. That return was submitted by Mr Halstead’s solicitor. At box 9 it was indicated that Mr Halstead did not claim any form of relief. The relevant tax of £7,500 was paid.

In terms of paragraph 6(3) Schedule 10 FA 03 the deadline for amending that return was one year after the filing date, namely 9 March 2017.

In terms of the relevant legislation, the deadline for making a claim for overpayment relief was four years after the effective date of the transaction, ie 8 February 2020. No claim was made in that period.

Mr Halstead and his wife subsequently purchased the Second Property which had an effective date of 11 May 2018. The SDLT return was filed on 14 May 2018 and the “filing date” was 10 June 2018 so it was filed in good time. Again, at box 9 no relief was claimed in the return. The tax of £12,800 was paid.

The deadline for amending that return was one year after the filing date, namely 10 June 2019. There was no amendment.

On 13 October 2021, Mr Halstead wrote to HMRC submitting a Memorandum (“M1”) referencing HMRC’s SDLT Manual SDLTM29630 (that was wrongly referenced but the enclosure was SDLTM29630) and section 74 Finance Act 1960 (“FA 60”). He asked that M1 be treated as a formal request for (a) amendment to both of the SDLT returns and (b) a full refund of “these improperly taxed amounts”.

He sought relief on the basis that “land transactions made by members of the Visiting Forces which promote the health or efficiency of such a force” are exempt from SDLT.

SDLTM29630 is very short and I annex a copy at Appendix 3.

On 26 October 2021, HMRC responded stating that:-

On 9 November 2021, Mr Halstead sent another Memorandum (“M2”) to HMRC arguing that:-

On 17 January 2022, HMRC responded pointing out that:-

On 20 January 2022, Mr Halstead sent another Memorandum (“M3”) to HMRC saying that he had discovered section 74A FA 60 in August 2021 and had realised that it should have applied to him. He argued that:-

On 18 February 2022, HMRC responded referring to their letter of 17 January 2022 and stating that:-

On 1 March 2022, Mr Halstead sent another memorandum (“M4”) to HMRC and argued that:-

On 29 March 2022, HMRC opened an enquiry into the claim for refund of overpaid SDLT. That made it explicit that it related only to the Second Property since it was the only property for which the claim was within the statutory four year time limit. It stated that the enquiry was opened pursuant to paragraph 7 Schedule 11A FA 03.

On 25 April 2022, Mr Halstead responded with a further Memorandum (“M5”) arguing strenuously that the claim in respect of the First Property was within the six year statutory limitation for “mistakes/careless behaviour of a third party (HMRC reference CH53200)”. He argued that that was a “potential violation of international agreement for improper taxation of Visiting Forces” and meant that the four year time limit in paragraph 34 Schedule 10 FA 03 did not apply. He enclosed further copies of M2, M3 and M4.

On 7 June 2022, HMRC responded with a Closure Notice. That letter stated that:-

On 8 June 2022, the Mr Halstead responded with a further Memorandum (“M6”) described as being for “HMRC Independent Tribunal” arguing that HMRC had applied an “arbitrary and capricious application” of the law which “reflects a bureaucratic effort to protect HMRC”. He appealed the decision on the basis that:-

On 7 June 2022, HMRC responded with their View of the Matter letter which confirmed the views in the Closure Notice.

On 7 September 2022, in their Review Conclusion letter, HMRC wrote to Mr Halstead confirming that the Closure Notice was upheld. Again that related only to the Second Property.

In summary, it stated that:-

On 8 September 2022, Mr Halstead prepared what he described as “Memorandum for HMRC Independent Tribunal” (“M7”). He reiterated his previous arguments. He relied on the wording of CH53200 for the proposition that there was no time bar. He also made reference to CH50100 arguing that HMRC had harmonised the time limits to assess taxes and make claims for relief.

He again argued that individuals were covered by the exemption, not least because section 74A FA 60 said Visiting Forces and international military headquarters, so therefore it could not just be the headquarters.

On 12 September 2022, Mr Halstead lodged his Notice of Appeal covering both properties, notwithstanding the fact that the Closure Notice related only to the Second Property.

On 20 January 2023, HMRC lodged their strike out application and on 23 January 2023 Mr Halstead lodged a further Memorandum (“M8”) which he described as a rebuttal of that application. He stated that:-

On 25 January 2023, HMRC responded to Mr Halstead pointing out that in their letter of 7 September 2022, HMRC had addressed the Proposal and went on to repeat the first quotation relied upon by Mr Halstead and said that it had not been quoted in context. HMRC added a further quotation:-

“Current law

[…]

Section 74A FA 1960 applies an exemption from stamp duty land tax in respect of any land transaction in connection with a NATO headquarters. The other three sections provide tax privileges to members of visiting armed forces and their civilian component who are either stationed in the UK or serving at a NATO headquarters in the UK …

Proposed Revisions

Legislation will be introduced in Finance Bill 2012 so that section 74A FA 1960 will apply to any international military headquarters in the UK. The other three sections will apply to military and civilian personnel either stationed in the UK or working at an international military headquarters in the UK”.

It was argued that the Proposal made it clear that section 74A FA 60 applies to NATO headquarters and not to military personnel of any Forces. Lastly, it was argued that the exemption could not be available to individual members of the Forces because British Forces had no relief from SDLT.

Later that day, Mr Halstead replied arguing that HMRC had misread the legislative history as well as the plain language of the Acts. He referred to M7 and reiterated his previous arguments in relation to the Proposal which he described as being a “HMRC Guidance Memorandum”. The primary thrust of his argument was that the title of section 74A FA 60 was “Visiting forces and allied headquarters” which distinguished between the headquarters and members of the Force which made up the Visiting Force.

He argued that the fact that UK Forces were not entitled to a relief was “specious” because the exemption applied specifically to Visiting Forces and not host nation personnel.

In support he again referred to NATO SOFA but this time to Articles X-X111 (but Articles XI to XIII relate to customs and therefore could not be relevant). He also referred to Article 1 of the Double Taxation Treaty but this time to paragraph 2 thereof. For completeness I annex at Appendix 5 the text of paragraphs 2 and 5(a) of Article 1 (and because it is referred to in paragraph 5 the text of paragraph 4) and the material portion of Article 26.

HMRC argue that the only issues are whether Mr Halstead can:-

As can be seen, Mr Halstead argues that there are far greater issues. Most of those are well summarised by him in M7 where he said:-

“…overpayments require immediate remedy under international law, and must be granted an indefinite period for correction….HMRC has illegally taxed an individual with sovereign tax-exempt status; such an error in international law is not limited by…domestic timelines.”

Whilst I understand that Mr Halstead feels that he is advocating not only for himself but also for all other members of the Visiting Forces, nevertheless each case turns on its own facts and I can only look at the facts in this case and apply the law to those facts.

In my view, although I have read and heard very diverse arguments, there are two key issues at the heart of this strike-out application.

The first is that HMRC argue that one of the core issues is that SDLT is a self-assessed tax and it is not predicated on residence or domicile. They are correct. As can be seen Mr Halstead has repeatedly focussed his arguments on the assertion that HMRC have “imposed” SDLT, they had taxed him [and his wife] and they had done so illegally. Bluntly they have not.

The reality is that what they have done is to refuse to repay tax that Mr Halstead, and his wife, through their then solicitors, self-assessed and elected to pay to HMRC. Incidentally, I have heard no argument that Mrs Halstead was a member of the Visiting Forces but I attach no weight to that potential argument since it was not raised before me and HMRC were represented by Counsel. I mention it since it may be raised on appeal. The short answer is that I have no evidence on that point so I cannot comment.

The second is whether section 74A FA 60 can be read as conferring an exemption on individual members of the Visiting Forces.

Although Mr Halstead has referred to, and relied upon, section 74 FA 60 (see paragraphs 19 and 27(g) above), that was repealed by paragraph 10(1) Schedule 39 Finance Act 2012. However, it is worth looking at and it reads:-

“74 Visiting forces and allied headquarters (stamp duty exemptions)

(1)

Subsections (2) to (4) of this section shall have effect with a view to conferring exemptions from stamp duty (corresponding to exemptions applicable in the case of Her Majesty’s forces) in relation to any visiting force of a designated country, and in those subsections “a force” means any such visiting force as aforesaid.

(2)

There shall be exempted from all stamp duties any contract, conveyance or other document made with a view to building or enlarging barracks or camps for a force, or to facilitating the training in the United Kingdom of a force, or to promoting the health or efficiency of a force….”.

As can be seen, its provisions have been very largely carried over into section 74A FA 60. The word “allied” has been replaced by the words “international military”. It does not refer to individual members and it does not refer to private homes. Nor does section 74A FA 60.

Prior to the repeal of section 74 FA 60, HMRC published what I have referred to as the Proposal. I described it as such because that is what it is. It most certainly is not a “HMRC Guidance Memorandum” (see paragraph 40 above) as Mr Halstead argued. Furthermore, the quotations from the Proposal cited by HMRC (see paragraph 39 above) appear in the section headed “Detailed Proposal”. I find that those quotations make it explicit that the SDLT exemption relates to headquarters and not to private homes. The other amendments that were proposed (and ultimately enacted) apply to the individual members of the Visiting Forces.

The Detailed Proposal follows on from a description of the background. Importantly that states that:-

Schedule 1 made it clear that the substantive change in relation to SDLT was to replace the word “allied” with the words “international military”. The Explanatory Note stated that the purpose was to bring the treatment of EU forces and staff into line with the “tax treatment already given” to NATO forces and civilian staff. Under the heading “Details of the Schedule” paragraph 2 reads:

“Paragraph 1 amends section 74A of the Finance Act (FA) 1960 so that the section applies an exemption from Stamp Duty Land Tax (SDLT) not just to land transactions in respect of a NATO headquarters, but also to land transactions in respect of any international military headquarters designated under an Order in Council. It also deletes the redundant subparagraph 4(c).”

Section 74A FA 60 has been in force since 1 December 2003. It can be seen that “visiting force” is clearly defined in section 74A(5)(c) and nowhere in the section is there reference to the individual members of a Visiting Force. For the avoidance of doubt that definition is directly derived from section 12(1) of the Visiting Forces Act 1952.

There is no doubt that the Secretary of State for Defence is a Minister of the Crown and therefore, in terms of section 107 Finance Act 2003, any purchases of land, which would obviously be “institutional”, for the British armed forces would be exempt from SDLT. Therefore in terms of section 74A(1) FA 60 the exemptions extended to Visiting Forces must correspond to the exemptions applying to the British armed forces, ie it must be at the same level.

That also makes sense when looking at the provisions of section 74A(2) FA 60 which refers to barracks and camps. Legislation has to be read as a whole and in context. Mr Halstead is not correct to rely only on the clause in that subsection referring to promoting the health or efficiency of a force. I apply the same rationale to SDLTM29630 (see paragraphs 17 and 18 above).

Whilst I have carefully considered all of Mr Halstead’s arguments on the Proposal and the wording of section 74A FA 60, nevertheless I cannot accept that the exemption from SDLT extends to individual members of NATO or EU forces. It never has done.

The wording of the section itself is clear and there is no need to look behind it. However, the Proposal, upon which Mr Halstead relies not only does not assist him but it makes it very clear that the changes in 2012 related only to “headquarters”.

HMRC are correct in arguing that the Proposal makes it clear that section 74A FA 60 applies only to headquarters and not to the military personnel of any forces. That has always been the case.

That should be the end of the matter, since on that basis there would be no SDLT exemption for individual members of any armed force, but in case I am wrong in that, I must look at the other issues.

There are two reliefs that are being sought here. Firstly, Mr Halstead seeks relief based on what he argues is the SDLT exemption. Secondly, he seeks overpayment relief albeit, as can be seen, he argues that I should not restrict my consideration of that issue to the provisions of domestic law.

Mr Winter argued that:-

By contrast Mr Halstead argued that matters of both fact and law, in respect of both properties, required nothing less than a full hearing and therefore the Tribunal must have jurisdiction.

As I said in the course of the hearing, and it is worth reiterating, the primary function of the Tribunal is to find the facts in the particular appeal before it and then apply the law to those facts. In this case there is no dispute about the facts relating to the purchase of the two properties and the reason why no claim for exemption was made at the time or within the prescribed statutory time limits.

My starting point is the First Property. The Tribunal only has jurisdiction in relation to “appealable decisions”. That is to say decisions where the legislation stipulates a right of appeal to the Tribunal. Not all decisions of HMRC are appealable decisions. HMRC argue that there is no appealable decision in relation to the First Property.

They are correct for the following reasons.

Paragraph 35(1) Schedule 10 FA 03 prescribes when an appeal can be brought. Only paragraph 35(1)(b) could possibly apply in the circumstances of this case and that is if there was “a conclusion stated or amendment made by a closure notice”. There is no closure notice because HMRC had not opened an enquiry into the SDLT return in terms of paragraph 12(1) Schedule 10 FA 03. Therefore they could not issue a closure notice in terms of paragraph 23 Schedule 10 FA 03. That is the only relevant statutory provision in relation to closure notices for SDLT purposes.

HMRC could never have opened an enquiry because of paragraph 12 Schedule 10 FA 03 which stipulates that an enquiry must be opened before the end of the enquiry period which is nine months after the filing date where there is no amendment to the return. It is common ground that there was no amendment to the return within the statutory time limits.

Mr Halstead argued that, given their “illegal actions” HMRC should have enquired and issued a closure notice. Shortly put, they simply could not have done so.

Mr Halstead has argued that there was an amendment some years later. He argues that paragraph 7(1) Schedule 10 FA 03 would have permitted an amendment by HMRC which he argues should have been done in response to his request for an amendment in M1.

That paragraph is headed “Correction of return by Revenue”. As can be seen, the wording of that paragraph is permissive and not mandatory. The crucial wording is that it states that HMRC “may amend a land transaction return so as to correct obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise)”.

HMRC are correct to say, as they did in their letter of 18 February 2022, that any such correction is only in regard to obvious errors or omissions and in any event no such correction can be made more than nine months after the date on which the return was delivered or the amendment, by the purchaser, was made and that would have had to have been within 12 months of the filing date.

Quite apart from the issue of time limits, Mr Halstead argues that there was an error of principle in that an SDLT exemption should have been claimed. The problem with that argument is that even if there is an SDLT exemption for members of Visiting Forces, which I do not accept, the failure to claim it was certainly not an “obvious error”.

Firstly, hitherto, no-one has ever even suggested that there is such an exemption so it cannot be obvious. Secondly, in the return(s) there is no indication that Mr Halstead (and/or his wife) were members of a Visiting Force. There is nothing on the face of the return(s) to suggest any obvious error.

I refer to the returns not least because the paragraph must be read as a whole. It is clear from the wording of that paragraph that the purpose of the legislation was to permit HMRC to unilaterally amend a return in certain circumstances; hence the following subparagraphs requiring HMRC to notify the purchaser and the purchaser having the right to reject the amendment. In this case it is the purchaser who is requesting the amendment.

The issue of time limits, whether to amend the return(s) or otherwise, is crucial for Mr Halstead and he has advanced many and varied arguments.

Ultimately, he argues that the filing deadlines for amendment of SDLT returns can be extended, or alternatively that the limitations imposed by statute simply do not apply, where there has been what he describes as “illegitimate taxation” which is in breach of international law.

I am entirely underwhelmed by the references to the Double Tax Treaty, the NATO SOFA or the Visiting Forces Act 1952. The short answer is that those antedate the introduction of section 74A FA 60 in 2003. They are uncontentious and have raised no issues in relation to SDLT until this appeal. Article X of NATO SOFA references taxation which is dependent on residence or domicile. SDLT depends on neither. Article 1 does define “force” but firstly, as HMRC noted that is for the purposes of that agreement only. In any event, read in context, the use of the word “personnel” is as a plural noun.

Mr Winter rightly accepts that HMRC is bound by international law but only where any such law is brought into domestic law. He relied upon the following extract from Halsbury’s Laws of England which reads:

“13.

The constitutional context

The place of international law and the conduct of international relations in English law are governed by the United Kingdom constitution. Of cardinal importance in this regard is the doctrine of parliamentary sovereignty, which implies that in no case may the express words of statute be overridden by reference to international law. Just as significant is the separation of powers as between Parliament and the executive, in accordance with which the executive may neither make nor abrogate domestic law by its acts alone. While the executive enjoys the constitutional authority to bind the United Kingdom as a matter of international law, it lacks the authority to secure by itself any necessary implementation in domestic law of the United Kingdom's international obligations. Equally, the separation of powers as between the executive and the judiciary means that the former's powers in relation to the conduct of international relations, including the assumption of international legal obligations on behalf of the United Kingdom, are mostly unsusceptible to judicial scrutiny as unreviewable exercises of the prerogative.”

I have added emphasis since, as I have already indicated the Tribunal is a creature of statute. As the Upper Tribunal pointed out at paragraph 36 of HMRC v Hok [2012] UKUT 363 (TCC) (“Hok”):-

“It is important to bear in mind how the First-tier Tribunal came into being. It was created by s 3(1) of the Tribunals, Courts and Enforcement Act 2007, ‘for the purpose of exercising the functions conferred on it under or by virtue of this Act or any other Act’. It follows that its jurisdiction is derived wholly from statute.”

Since that decision is binding upon me, I am therefore constrained to consider only the statutory provisions.

Whilst referring to Hok, since Mr Halstead argued that it would be unfair if members of the Visiting Forces had to pay SDLT and so he sought equitable relief, I point out that the Upper Tribunal in Hok decided at paragraph 58 that the First-tier Tribunal has no jurisdiction to consider issues of fairness.

In any event, HMRC were correct to say that paragraph 34(6) Schedule 10 FA 03 excludes non-statutory liability.

In summary, in the absence of a closure notice there is no appealable decision and the Tribunal has no jurisdiction in relation to the purported amendment to the SDLT return for the First Property. The appeal in that regard must be struck out.

As far as the overpayment relief claim for the First Property is concerned, the right to appeal to the Tribunal is to be found in paragraph 14(1) Schedule 11A FA 03 which states that “an appeal may be brought against a conclusion stated or amendment made by a closure notice”. The provisions relating to a closure notice are to be found in paragraph 11 Schedule 11A FA 03 and there was never an enquiry into the return First Property.

In any event, paragraph 34B(1) Schedule 10 FA 03 makes it explicit that a claim for overpayment relief cannot be made more than four years after the effective date of the transaction. The claim was made on 20 January 2022 which was almost two years after the expiry of that deadline.

In summary, whilst the appellant did purport to make a claim for overpayment relief, it was not a valid claim into which HMRC would have had the statutory ability to enquire and thereafter issue a closure notice. There is no appealable decision in relation to the overpayment relief. The Tribunal therefore has no jurisdiction.

I therefore find that, in relation to both the SDLT exemption and the overpayment relief claim, Mr Halstead’s appeal in relation to the First Property must be struck out in terms of Rule 8(2) of the Rules.

What then of the Second Property (and if I am wrong about the First Property) and the prospects of success at a full hearing?

As can be seen, Mr Halstead has deployed many and varied arguments and there are a number of points that I should address at the outset. The first issue is that the heart of this appeal is the question of statutory construction. Mr Halstead has also repeatedly relied on what he describes as HMRC’s guidance and manuals.

The Upper Tribunal in Sippchoice v HMRC [2020] UKUT 149 (TCC) (“Sippchoice”) considered both the question of statutory construction and the use of HMRC’s manuals and of course both of those issues arise in this instance. Roth J and Judge Sinfield said at paragraph 18 that:-

“18.

….Lewison LJ helpfully explained the correct way to approach the construction of legislation in Pollen Estate Trustee Co Ltd v HMRC [2013] EWCA Civ 753, [2013] STC 1479, in particular at [24] where he summarised the applicable principles as follows: “[24] The modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose. This approach applies as much to a taxing statute as any other: see IRC v McGuckian [1997] STC 908 at 915, [1997] 1 WLR 991 at 999; Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes) [2004] UKHL 51 at [28], [2005] STC 1 at [28], [2005] 1 AC 684. In seeking the purpose of a statutory provision, the interpreter is not confined to a literal interpretation of the words, but must have regard to the context and scheme of the relevant Act as a whole: see WT Ramsay Ltd v IRC, Eilbeck (Inspector of Taxes) v Rawling [1981] STC 174 at 179–180, [1982] AC 300 at 323; Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes), [2005] STC 1 at [29], [2005] 1 AC 684 at [29]. The essence of this approach is to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description. Of course this does not mean that the courts have to put their reasoning into the straitjacket of first construing the statute in the abstract and then looking at the facts. It might be more convenient to analyse the facts and then ask whether they satisfy the requirements of the statute. But however one approaches the matter, the question is always whether the relevant provision of statute, upon its true construction, applies to the facts as found: see Barclays Mercantile Business Finance Ltd v Mawson at [32].”

They went on to say at paragraph 44 that:-

“Statements in HMRC’s manuals are merely HMRC’s interpretation of the law in their internal guidance and they do not have the force of law. We must interpret the legislation in accordance with the principles of construction described above and if we conclude, as we have, that the legislation bears a different meaning to that found in the HMRC manual, the legislation must be preferred.”

I have already explained, at some length, the purpose of section 74A FA 60 and do not propose to elaborate further on that.

Turning to the manuals. CH53200 is entitled “CH53200-Assessing Time Limits: Extended time limits: Reliance on another person” and deals only with the time limits within which HMRC must raise assessments where a loss of tax was brought about carelessly. It does not deal with time limits for claims of any sort. It does not assist Mr Halstead and it is not relevant to this appeal.

In M7 he argued that in CH50100 HMRC had harmonised the time limits to assess taxes and make claims for relief. In fact that excerpt from the manual is described as “Assessing Time limits: Overview”. I do not propose to quote it in its entirely but it narrated that if HMRC were able to align time limits “where possible” that would reduce compliance costs and make compliance checks easier. In regard to stamp duty what it says is

“Where we

…

•

amend a return in a stamp duty land tax enquiry closure notice,

the person may be able to make various consequential claims and elections that otherwise would have been out of time. More detail is at CH55100”.

Of course, there was a closure notice for the Second Property but CH55100 states that consequential claims “can only be made in very specific circumstances and each tax has its own rules and time limits” and it relies on “specific legislation”. There was no general alignment of the timing for assessments and claims. That guidance does not assist Mr Halstead and is not relevant to this appeal.

The time limits for SDLT are clearly set out in FA 03.

Mr Winter relied on Smith Homes 9 Ltd v HMRC [2022] UKFTT 5 (TC) (“Smith”) at paragraphs 80 to 87 which, although it relates to a different relief, is indeed analogous. It is not binding on me but I agree with Judge McKeever.

In that case where she was considering Case A (paragraph 34A(2) Schedule 10 FA 03, she relied on Candy at paragraph 112 which I have quoted at paragraph 30(6) above.

She found that the failure to make a claim which the appellant could have made in a return, falls within Case A and therefore HMRC is not liable to give effect to an overpayment relief claim. At paragraph 82 she found that that was entirely consistent with the scheme of the SDLT legislation which provides for relief, as it does in this instance with section 74A FA 60, and sets out mandatory requirements including time limits for the relief to be claimed.

She found that “the appellant cannot circumvent those requirements by submitting a repayment claim under paragraph 34. The provisions of paragraph 34A mean that HMRC is not bound to give effect to the claim in these circumstances”.

She also relied on the Tribunal in Secure Service v HMRC [2020] UKFTT 59 where, at paragraph 48, Judge Fairpo found at paragraph 48 that “…it would be inconsistent with the aims of the legislation if a twelve month time limit could circumvented (sic) simply by describing a claim for relief as a claim for a refund of an overpayment”.

I agree entirely.

Going back to De Sales, do I think that Mr Halstead has a realistic prospect of success which carries some degree of conviction? I do not.

If either purchase had met the conditions for an SDLT exemption which, of course, is disputed, Mr Halstead would be unable to attain the relief or attain repayment of the tax allegedly “overpaid” so an appeal would fail.

The reasons why it would fail would include:-

Accordingly, I find that in terms of Rule 8(3) of the Rules that there is no reasonable prospect of success so the appeal should be struck out.

For all these reasons the appeal is struck out.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

…

The Tribunal must strike out the whole or a part of the proceedings if the Tribunal—

does not have jurisdiction in relation to the proceedings or that part of them; and

does not exercise its power under rule 5(3)(k)(i) (transfer to another court or tribunal) in relation to the proceedings or that part of them.

…

…

the Tribunal considers there is no reasonable prospect of the Mr Halstead’s case, or part of it, succeeding.

visiting forces of designated countries, which are present in the UK at the invitation of HM Government, or

designated international military headquarters established under the North Atlantic Treaty.

building or enlarging barracks or camps for the visiting force of a designated country,

facilitating the training in the United Kingdom of such a force, or

promoting the health or efficiency of such a force.

it were a visiting force of a designated country,

the members of that force were the persons serving at or attached to the headquarters who are members of the armed forces of a designated country and

Appendix 4

Where the legal incidence of any form of taxation in the receiving State depends upon residence or domicile, periods during which a member of a force or civilian component is in the territory of that State by reason solely of his being a member of such force or civilian component shall not be considered as periods of residence therein, or as creating a change of residence or domicile, for the purposes of such taxation. Members of a force or civilian component shall be exempt from taxation in the receiving State on the salary and emoluments paid to them as such members by the sending State or on any tangible movable property the presence of which in the receiving State is due solely to their temporary presence there.

Nothing in this Article shall prevent taxation of a member of a force or civilian component with respect to any profitable enterprise, other than his employment as such member, in which he may engage in the receiving State, and, except as regards his salary and emoluments and the tangible movable property referred to in paragraph 1, nothing in this Article shall prevent taxation to which, even if regarded as having his residence or domicile outside the territory of the receiving State, such a member is liable under the law of that State.

Nothing in this Article shall apply to “duty” as defined in paragraph 12 of Article X1.

For the purposes of this Article the term “member of a force” shall not include any person who is a national of the receiving State.