Sections 132 and 133 of the Income Tax Act 2007 were consistent with paragraph 2 of Schedule 1B to the Taxes Management Act 1970 and the two sets of provisions could operate in conjunction.

Morgan J so held when dismissing a claim for judicial review brought by the claimant taxpayer, James Derry. The claimant sought judicial review of a demand for tax dated 21 February 2014, made on him by Her Majesty’s Revenue and Customs (“HMRC”). The claim was issued in the Administrative Court of the Queen’s Bench Division where the claimant was given permission to seek judicial review and the claim was then transferred to the Upper Tribunal (Tax and Chancery Chamber). The claimant argued that he was entitled to claim relief for capital loss, pursuant to Chapter 6 of Part 4 of Income Tax Act 2007 (“ITA”). HMRC disputed that there had been a capital loss, but argued that, even if there had been, the claimant could not claim relief for that loss, and relied on section 42 of and Schedule 1B to the Taxes Management Act 1970 (“TMA”). The question arose whether the detailed provisions of sections 132 and 133 of the ITA were inconsistent with the operation of paragraph 2 of Schedule 1B to the TMA or whether they amounted to specific provisions which should be regarded as overriding the general provisions of paragraph 2 of Schedule 1B.

Section 132(1) of the Income Tax Act 2007 provides that the claimant “may make a claim” for the loss to be deducted in calculating his net income both for the year of the loss, for the previous tax year or for both tax years.

Section 133 of the Income Tax Act 2007 provides that the loss is to be deducted in calculating the claimant’s net income for the specified tax year.

Section 42 of the Taxes Management Act 1970 sets out the procedure for making a claim.

Paragraph 2 of Schedule 1B to the Taxes Management Act 1970 provides: “2(1) This paragraph applies where a person makes a claim requiring relief for a loss incurred or treated as incurred, or a payment made, in one year of assessment (‘the later year’) to be given in an earlier year of assessment (‘the earlier year’).”

MORGAN J said that it was difficult to argue that there was something in sections 132 and 133 which was inconsistent with paragraph 2 of Schedule 1B so that one set of provisions had to yield to the other to make them workable. The two sets of provisions therefore could operate in conjunction. As to the argument that one set of provisions was general and the other was specific, so that the specific prevailed over the general, the court considered that both sets of provisions were specific in character. Sections 132 and 133 of ITA were specific as to the entitlement to make a claim to deduct capital losses from income; section 42 and Schedule 1B of TMA were specific as to the procedure for making claims and as to the effect of claims.