In 1987, trustees holding land for various beneficiaries in undivided shares entered into a contract to sell it to a purchaser. In 1989 Mr and Mrs Jerome, who were absolutely entitled to interests in the land, assigned part of their beneficial interests (subject to the contract) to the trustees of two Bermuda settlements. By three conveyances in 1990-1992, the original trustees completed the contract of sale. The revenue claimed that the disposal was made at the time of the contract; the taxpayer argued for the time of the conveyances.
Held: The section did not provide a clear answer for this situation. The section was intended to fix the time of disposal. It was not intended to impose a liability to tax upon a person who would not be treated as having made a disposal under the carefully constructed scheme for taxing the disposals of assets held on trust, particularly where this might lead to a double charge to tax.
Lord Walker said that ‘beneficial ownership of the land is in a sense split between the seller and buyer on the provisional assumptions that specific performance is available and that the contract will in due course be completed . . ‘
Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood
[2004] UKHL 25, Times 20-May-2004, [2004] 21 EGCS 151, [2004] STI 1201, [2004] 2 All ER 835, [2004] 1 WLR 1409, [2004] NPC 75, [2004] WTLR 681, [2004] STC 887, 76 TC 147, [2004] BTC 176
House of Lords, Bailii
Capital Gains Tax Act 1979 46 58
England and Wales
Citing:
Appeal from – Jerome v Kelly (HM Inspector of Taxes) CA 20-Dec-2002
The taxpayer had contracted for the disposal of land in three tranches. The later sales were by a Bahamian company to whom the land was assigned subject to the contract.
Held: The later sales were under the original contract. That contract . .
Cited – Burnett’s Trustee v Grainger and Another HL 4-Mar-2004
A flat was sold, but before the purchasers registered the transfer, the seller was sequestrated, and his trustee registered his own interest as trustee. The buyer complained that the trustee was unjustly enriched.
Held: The Act defined the . .
Cited – Eastham v Leigh London and Provincial Properties Ltd CA 1971
A contract is not conditional merely because it contains obligations which may be termed promissory conditions. The taxpayer company was the prospective tenant under a building agreement. By clause 4 it agreed to build a six-story office block in . .
Cited – Lysaght v Edwards ChD 20-Mar-1876
The testator had agreed to sell a farm, but died before completion.
Held: The farm passed under a devise of ‘all the real estate which at my death might be vested in me as trustee.’ On the making of contract for the purchase of land, the . .
Cited – Shaw v Foster HL 14-Mar-1872
As regards the trusteeship which arises for a vendor of land after exchange of contracts: ‘there cannot be any doubt of the relation subsisting in the eye of a Court of Equity between the vendor and the purchaser. The vendor was a trustee of the . .
Cited – Kirby v Thorn EMI Plc 1987
Taxation of asset assigned before it was created. . .
Cited – Rayner v Preston CA 8-Apr-1881
The vendors agreed to sell a house which they had insured against fire risk. The house was damaged by fire after contract but before completion, and the issue was whether the purchaser was entitled to the benefit of the insurance.
Held: . .
Cited – Aberdeen Construction Group Ltd v Inland Revenue Commissioners HL 1978
The House gave guidance on the interpretation of Tax statutes.
Held: The consideration at issue had been paid both for shares and for something else, the waiver of a loan the seller had made to the company. Lord Wilberforce emphasised the need . .
Cited – Chang v Registrar of Titles 11-Feb-1976
(High Court of Australia) The court discussed the trusteeship arising on a contract for the sale of land.
Mason J said: ‘It has long been established that a vendor of real estate under a valid contract of sale is a trustee of the property sold . .
Cited – Marshall (Inspector of Taxes) v Kerr HL 30-Jun-1994
A settlor by will was deemed to have had an interest as funds were passed to a Jersey Trust. The section merely made or allowed that a variation of a will would not be a taxable event in UK law. It had no other effects. A deed of family arrangement . .
Cited – Burca v Parkinson ChD 2001
An assignment of the consideration due under a contract does not alter the capital gains tax liability of the person making the disposal. . .
Cited by:
Appealed to – Jerome v Kelly (HM Inspector of Taxes) CA 20-Dec-2002
The taxpayer had contracted for the disposal of land in three tranches. The later sales were by a Bahamian company to whom the land was assigned subject to the contract.
Held: The later sales were under the original contract. That contract . .
Cited – Cook v The Mortgage Business Plc CA 24-Jan-2012
cook_mbpCA2012
The land owners sought relief from possession orders made under mortgages given in equity release schemes: ‘If the purchaser raises all or part of the purchase price on mortgage, and then defaults, the issue arises whether the mortgagee’s right to . .
Cited – Scott v Southern Pacific Mortgages Ltd and Others SC 22-Oct-2014
The appellant challenged a sale and rent back transaction. He said that the proposed purchaser had misrepresented the transaction to them. The Court was asked s whether the home owners had interests whose priority was protected by virtue of section . .
These lists may be incomplete.
Updated: 17 July 2021; Ref: scu.196757
