Property 118 Limited & Anor v The Commissioners for HMRC

Facts

Property 118 Limited, which operates a large online forum and consultancy service for private landlords, and Cotswold Barristers Limited, the service company associated with a chambers with which it worked in a joint venture, appealed against HMRC's allocation to them, notified on 9 February 2024, of scheme reference numbers under section 311 of the Finance Act 2004. The numbers were allocated in respect of two sets of arrangements by which property letting businesses, usually carried on in partnership by a married couple, were incorporated: the substantial incorporation structure, under which only the beneficial interest in the properties passed to a new company while legal title and the existing mortgages remained with the users, and the capital account restructure, which added a bridging loan repaid within a day so that the users' capital was converted into a director's loan account repayable without income tax. HMRC, suspecting the appellants to be promoters who had not notified the arrangements as required by section 308 of the Finance Act 2004, issued notices under section 310D of the Finance Act 2004 and then allocated the numbers. The appellants appealed under section 311B of the Finance Act 2004 on the ground that neither structure constituted notifiable arrangements, HMRC contending that they fell within descriptions 5, 3 and 9 of the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006. The appeals were heard over ten days in February 2026.