Commissioners for His Majesty's Revenue and Customs (Appellant) v Vermilion Holdings Ltd (Respondent) (Scotland)
Case ID: 2022/0007
Case summary
Issue
Was the right or opportunity for Mr Noble to acquire the 2007 Option (a) available by reason of his directorship of VHL (section 471(1) ITEPA); or (b) made available by Mr Noble’s employer (section 471(3) ITEPA), thereby subjecting it to income tax under Chapter 5, Part 7 of ITEPA?
Facts
In 2007, Vermilion Holdings Limited (“VHL”) granted Quest Advantage Limited (“Quest”), a corporate advisory and accounting company owned by Mr Noble (of which he was a director), an option to acquire 1.5% of VHL’s ordinary share capital (the “2007 Option”). Mr Noble was also appointed as a director of VHL from 16 March 2007, with a £4,167 monthly fee. The 2007 Option was novated to Mr Noble on 9 June 2016. Following a sale of VHL in November 2016, Mr Noble realised £636,238 from the exercise of the 2007 Option.
A dispute arose as to whether the gain was subject to income or capital gains tax. HMRC considered the 2007 Option an employment-related securities option under section 471 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”), making Mr Noble liable for £285,148.76 (income tax) and £100,709.98 (National Insurance), by decisions dated 17 August 2017.
VHL appealed against these decisions to the First-Tier Tribunal, which allowed VHL’s appeal. By decision dated 27 May 2020, the Upper Tribunal allowed HMRC’s appeal. The Inner House allowed VHL’s appeal by decision dated 20 August 2021. HMRC now appeals to the Supreme Court.
Judgment appealed
Parties
Appellant(s)
Commissioners for His Majesty’s Revenue and Customs
Respondent(s)
Vermilion Holdings Ltd
Appeal
Justices
Lord Hodge, Lord Lloyd–Jones, Lord Leggatt, Lord Burrows, Lady Rose
Hearing start date
7 February 2023
Hearing finish date
7 February 2023
| Watch hearing | ||
|---|---|---|
| 7 February 2023 | Morning session | Afternoon session |
Judgment details
Judgment date
25 October 2023
Neutral citation
[2023] UKSC 37
- Judgment (PDF)
- Press Summary (PDF)
- Judgment on The National Archives (HTML version)
- Press Summary on The National Archives (HTML version)
- Judgment on BAILII (HTML version)
| Watch Judgment summary | |
|---|---|
| 25 October 2023 | Judgment summary |