Watts (Appellant) v Commissioners for His Majesty's Revenue and Customs (Respondent)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

UKSC/2026/0004

Parties

Appellant(s)

Timothy Watts

Respondent(s)

The Commissioners for His Majesty's Revenue and Customs

Issue

Are losses sustained by a taxpayer through his involvement in a gilt strip tax avoidance scheme losses for the purpose of paragraph 14A of Schedule 13 to the Finance Act 1996?

Facts

The Commissioners for His Majesty’s Revenue and Customs (“HMRC”) issued a closure notice to Timothy Watts on 3 August 2018. This amended his self-assessment return for the tax year ended 5 April 2004. The amendments disallowed Mr Watts’ claim to income tax loss of £1,349,600. The claim to income tax loss arose from Mr Watts’ participation in a gilt strip planning scheme promoted by Grant Thornton. Mr Watts claimed losses sustained from “strips of government securities” pursuant to paragraph 14A of Schedule 13 to the Finance Act 1996. The scheme involved the following. Mr Watts purchased gilt strips for £1.5 million. He granted an option to purchase the gilt strips to a trust of which he was a life tenant and benefits (for which the trust paid £1.34 million) with an exercise price of £150,400. The trustee assigned the option to Investec Bank (UK) Ltd (“Investec”) for a price of £1,346.200. Investec exercised the option and paid the Appellant £150,400 to purchase the gilt strips. The net result of the composite transaction, by which the Appellant was repaid around £1.489 million, was that the Appellant lost a few thousand pounds in transferring the option to purchase the gilt strips to the trustee and the exercise of the option to Investec. Mr Watts appealed the closure notice to the First-tier Tribunal, which reduced the quantum of loss claimed by over 99% to £6,300. He then appealed to the Upper Tribunal and, subsequently, the Court of Appeal which both dismissed the appeal in turn. Mr Watts now seeks permission to appeal to the Supreme Court.