Gordon Dadds had previously successfully acted for the claimants in the High Court case of Parabola Investments Ltd –v- Browallia Cal Ltd , in which Mr Gill was the driving force behind the claimant companies.
In the Parabola case it was widely acknowledged that Mr Gill was one of the most successful traders in shares and other derivatives that the City had ever known. After leaving university he started trading in his parents’ spare room and in just a few years turned £7,000 into £7million. He traded in such volumes that his then brokers could not keep up, so he changed to another broker that came to be owned by MF Global, one of the largest brokers in the world. Unfortunately there his account was handled by Mr Bomford who over several months systematically defrauded Mr Gill by encouraging him to trade in stock and in a way with which he was unfamiliar and by telling him that his trading was extremely successful, when, in fact, it was not. He also made unauthorised trades and failed to execute others in accordance with instructions. This led to MF Global being ordered to pay damages approaching £20 million to the claimant companies which set a precedent in the broking industry. The High Court’s judgment was later upheld by the Court of Appeal.
For the tax year 2011 to 2012, Mr Gill was entitled to claim loss relief in relation to losses incurred as a result of his trading pursuant to the Income Tax Act 2007 (“ITA”)
In October 2013, HMRC opened an enquiry into Mr Gill’s loss relief claim. HMRC concluded their enquiry finding the following:
(a) Mr Gill’s activity did not amount to a trade (s.64(1) of the ITA);
(b) Mr Gill’s activity was not conducted on a commercial basis (s.66(2)(a) of the ITA); and
(c) Mr Gill’s activity was not conducted with a view to the realisation of profits (s.66(2)(b) of the ITA).
Mr Gill appealed HMRC’s findings.
The two week trial took place during April 2018 in which Mr Gill was cross-examined for several days, alongside other witnesses whom had supported Mr Gill in his Appeal.
Subsequently, in the Decision handed down by Judge Phillip Gillett on 1st May, Judge Gillett held that he had no doubt that Mr Gill was (i) trading, (ii) was trading with a view to doing so on a commercial basis and (iii) was trading with a view to the realisation of profits. Therefore, Mr Gill was successful in each and every part of his appeal against HMRC.
HMRC chose not to appeal the Decision.
This article can inevitably only give a very brief description of the case. The full Decision can be found here.