swarb.co.uk - law index
These cases are from the lawindexpro database. They are now being transferred to the swarb.co.uk website in a better form. As a case is published there, an entry here will link to it. The swarb.co.uk site includes many later cases. Â
Capital Gains Tax - From: 1970 To: 1979
This page lists 9 cases, and was prepared on 20 May 2019.
Â
 Mangin v Commissioner of Inland Revenue; PC 1971 - [1971] AC 739
Â
Hinchcliffe (Inspector of Taxes) v Crabtree [1971] 2 All ER 104
1971
CA
Capital Gains Tax
The taxpayer's shareholding was to be sold in a take-over. A sale was substantially agreed, but not completed for several months. The base value of the shares fell to be set by the quoted price at the start of the tax year. The take-over had not been announced, and the taxpayer argued that the quoted price of the shares did not reflect the true value. The Inland Revenue appealed a finding that the impending take-over constituted an exceptional circumstance so that the quoted price could be adjusted upward reducing the chargeable gain. Held: The appeal succeeded. The fact that the price set by the stock exchange was founded upon a mistake was not an exceptional circumstance within the Act so as to allow any other price to be used.
Finance Act 1965 44(3)
1 Cites
1 Citers
Â
 Eastham v Leigh London and Provincial Properties Ltd; 1971 - (1971) 46 TC 687
Â
Lynall v Inland Revenue Commissioners [1971] 3 All ER 914; [1972] AC 680
2 Jan 1971
HL
Lord Reid
Capital Gains Tax
The House was asked about the fixing of "price . . in the open market" of a parcel of shares held in a private company. The Finance Act 1894 provided a method of valuation of property for estate duty purposes by reference to what the property would fetch if sold in the open market at the time of death. Confidentially there was a flotation in contemplation, but this was not public knowledge. The possibility of flotation would increase the value of the shares. The Revenue contended that the possibility should be taken into account. Held. The hypothetical purchaser should not be treated as having knowledge of such information. Under section 160, the basis of valuation is what would have been paid for the subject property, in the open market, by a willing purchaser from a willing seller
Lord Reid said: "We must decide what the highest bidder would have offered in the hypothetical sale in the open market, which the Act requires us to imagine took place at the time of Mrs. Lynall’s death. The sum which any bidder will offer must depend on what he knows (or thinks he knows) about the property for which he bids. The decision of this case turns on the question what knowledge the hypothetical bidders must be supposed to have had about the affairs of Linread. One solution would be that they must be supposed to have been omniscient. But we have to consider what would in fact have happened if this imaginary sale had taken place, or at least - if we are looking for a general rule - what would happen in the event of a sale of this kind taking place. One thing which would not happen would be that the bidders would be omniscient. They would derive their knowledge from facts made available to them by the shareholder exposing the shares for sale. We must suppose that, being a willing seller and an honest man he would give as much information as he was entitled to give. If he was not a director he would give the information which he could get as a shareholder. If he was a director and had confidential information, he could not disclose that information without the consent of the board of directors.
The respondents' figure of £4 10s. per share can only be justified if it must be supposed that these reports would have been made known to all genuine potential buyers, or at least to accountants nominated by them. That could only have been done with the consent of Linread's board of directors. They were under no legal obligation to make any confidential information available. Circumstances vary so much that I have some difficulty in seeing how we could lay down any general rule that directors must be supposed to have done something which they were not obliged to do. The farthest we could possibly go would be to hold that directors must be deemed to have done what all reasonable directors would do. Then it might be reasonable to say that they would disclose information provided that its disclosure could not possibly prejudice the interests of the company. But that would not be sufficient to enable the respondents to succeed."
Finance Act 1894
1 Cites
1 Citers
Â
Crabtree v Hinchcliffe (Inspector of Taxes) [1971] UKHL TC - 47 - 419
27 Oct 1971
HL
Capital Gains Tax
HL Capital gains tax - Market value at 6th April 1965 - Quoted shares - Takeover negotiations in progress - Negotiations not known to public - Whether in consequence of special circumstances quoted price not proper measure of market value - Finance Act 1965 (c. 25), s. 44.
Finance Act 1965 44
[ Bailii ]
Â
Crabtree v Hinchcliffe (Inspector of Taxes) [1971] 3 WLR 821; [1971] 3 All ER 967; (1971) 47 Tax Cases 419
27 Oct 1971
HL
Lord Reid, Lord Morris of Borth-y-Gest, Viscount Dilhorne, Lord Donovan, Lord Pearson
Capital Gains Tax, Taxes Management
The taxpayer's shareholding in his quoted company was to be sold. A sale was substantially agreed, but not completed for several months. Between times came the beginning of the tax year. The Act provided that, for quoted shares, save in special circumstances, the base value of the shares was to be the quoted price at the start of the tax year. The taxpayer argued that that price had been set in ignorance of the take-over, and therefore substantially undervalued the shares, and that that error was a special circumstance. Held: The taxpayer's appeal failed. The special circumstances had to apply at the time in issue, the start of the tax year. The Special Commissioners' findings of fact were not set out satisfactorily, and did not state whether an announcement should have been made before the start of the tax year. Nevertheless, the negotiations had not at that date reached a stage at which an announcement would have been correct, and the quoted price remained appropriate. Board members of companies will often have price sensitive information which they cannot yet disclose. That does not mean that the public market in the shares is a false market. The Revenue's interpretation of special circumstances was unnecesarily narrow, but this did not affect the outcome. Viscount Dilhorne: 'For circumstances to be special must be exceptional, abnormal, or unusual and the mere fact that directors have knowledge which would affect the prices quoted if made public cannot, in my view, be regarded as an unusual circumstance.'
Finance Act 1965 44(3)
1 Cites
Â
Makins v Elson [1977] 1 WLR 221
1977
Housing, Capital Gains Tax
The Court had to consider whether the tax-payer was liable to capital gains tax upon the disposal of his mobile caravan. Held: The Act distinguished between a dwelling house and land.
Finance Act 1965 29
Â
Aberdeen Construction Group Ltd v Inland Revenue Commissioners [1978] AC 885; [1978] UKHL TC - 52 - 281; [1978] 1 All ER 962; (1978) 52 Tax Cas 281
1978
HL
Lord Wilberforce
Capital Gains Tax, Corporation Tax
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 to consider each asset disposed of separately in the light of the rules which apply to that particular asset.
TC Corporation tax - Chargeable gains - Disposal by holding company of its shares in subsidiary company on condition that holding company waived repayment of its loans to the subsidiary - Whether consideration given for shares alone or shares and loans - Whether the loans were debts on a security and an allowable loss accrued - Whether the amount o f the loans was an allowable deduction in computing the gain or loss on the disposal - Finance Act 1965 (c 25), Sch 7, para 11; Sch 6, paras 4(1) (b), 8.
Capital gains tax is a tax on gains, or gains less losses. It is not a tax on arithmetical differences. To say that a loss (or gain) which appears to arise at one stage in an indivisible process, and which is intended to be and is cancelled out by a later stage, so that at the end of what was bought as, and planned as, a single continuous operation, is not such a loss (or gain) as the legislation is dealing with is well, and indeed essentially, within the judicial function.
Finance Act 1965
1 Citers
[ Bailii ]
Â
Rank Xerox Ltd v Lane (Inspector of Taxes) [1979] UKHL TC - 53 - 185; [1979] 3 WLR 594; [1979] TR 327; [1979] 3 All ER 657; [1980] RPC 385; [1981] AC 629; 53 TC 185; [1979] STC 740
25 Oct 1979
HL
Capital Gains Tax
HL Capital gains tax - Disposal of a right to what was termed a "royalty" - Whether a disposal of a right to an "annual payment due under a covenant not secured on any property - Finance Act 1965 (c 25), Sch 7, para 12(c).
Finance Act 1965
[ Bailii ]
Â
