The taxpayer lost its appeal concerning an “unauthorised employer payment” in Nilebond Ltd v HMRC [2023] UKFTT 14 (TC).
The key paragraphs of the judgment include the following:
“In Mr Bradley’s submission [for HMRC], a loan subject to an unregistered charge was therefore not “secured” by a charge, and this was sufficient to decide the First Issue in HMRC’s favour. I agreed with Mr Bradley for the reasons he gave.
Sch 30, para 1(4) provides that a loan will not be “authorised” unless it meets Condition C, namely that it “takes priority over any other charge over the assets”. Mr Bradley said that this Condition reinforced his main point that an unregistered charge was not enforceable against a liquidator, administrator or other creditors, and thus in terms was not secured at all. Even if a further charge was issued on terms that it ranked above another, that priority was simply not enforceable. An unregistered charge could therefore never take “priority over any other charge over the assets” because all chargeholders would be in the same position as any other creditor.
In his submission, a loan could not be an “authorised employer loan” if it was not possible for it to satisfy Condition C. It followed that the Condition was also not met where, as here, there was no other extant charge at any time during the lifetime of the Loan, Again, I agree.”
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08676.html
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