UK's Upper Tribunal decision in Greene King: tax and accounting
30 May 2014
The UK's Upper Tribunal has upheld the First-tier Tribunal’s (FTT’s) decision in Greene King. Planning designed to obtain a deduction with no taxable receipt was held to have failed.
While the law has changed significantly since the transactions occurred, the case provides a useful example of HMRC successfully challenging a taxpayer’s accounting treatment in order to defeat tax planning, and the Upper tribunal was unwilling to overturn the FTT’s consideration of expert evidence in this regard.
The case needs to be seen in the context of the wider ongoing debate on the relationship between accounting and tax when it comes to the taxation of debt. In particular, it upholds the principle that there can be more than one GAAP-compliant way to account for a transaction.