swarb.co.uk - law index
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Taxes Management - From: 1980 To: 1984
This page lists 8 cases, and was prepared on 02 April 2018.
ÂChinn v Hochstrasser (Inspector of Taxes) [1981] 1 All ER 189; [1981] AC 533; [1980] UKHL TC_54_311; [1981] 2 WLR 14; 54 TC 311; [1980] TR 467; [1981] STC 1
11 Dec 1980
HL
Lord Roskill
Taxes Management, Income Tax, Capital Gains Tax
The House considered the meaning of the word 'bounty' in an income tax context, where it had been used by the courts: "My Lords, I would venture to point out that the word "bounty" appears nowhere in the statute. It is a judicial gloss upon the statute descriptive of those classes of cases which are caught by the section in contrast to those which are not. The courts must, I think, be extremely careful not to interpret this descriptive word too rigidly . . What the cases have sought to do is to distinguish between those cases where the recipient has in return for that benefit which he has received accepted some obligation which he has to perform, either before receiving the benefit or at some stated time thereafter, and those cases where the recipient benefits without any assumption by him of any correlative obligation."
HL Capital gains tax - Avoidance - Foreign trustees - Appointment to beneficiary of interest in shares contingent on survivalfor three days - Immediate sale by him to foreign company coupled with contract to repurchase shares on fourth day - Whether scheme effective to avoid apportionment of gain to beneficiary - Finance Act 1965 (c 25), ss 25(3) and 42(2) and Sch 7, para 13(1).
Finance Act 1965 25(3) 42(2)
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 Van Boeckel v Customs and Excise Commissioners; 1981 - [1981] STC 290
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Spa Vinal v Spa Orbat R-46/80; [1981] EUECJ R-46/80; C-46/80
14 Jan 1981
ECJ
European, Taxes Management, Constitutional
ECJ 1. In its present stage of development community law does not restrict the freedom of each member state to lay down tax arrangements which differentiate between certain products on the basis of objective criteria, such as the nature of the raw materials used or the production processes employed. Such differentiation is compatible with community law if it pursues objectives of economic policy which are themselves compatible with the requirements of the treaty and its secondary law and if the detailed rules are such as to avoid any form of discrimination, direct or indirect in regard to imports from other member states or any form of protection of competing domestic products.
2. Tax arrangements which impose heavier charges on denatured synthetic alcohol than on denatured alcohol obtained by fermentation on the basis of the raw materials and the manufacturing processes employed for the two products are not at variance with the first paragraph of article 95 of the eec treaty if they are applied identically to the two categories of alcohol originating in other member states.
Such tax arrangements are justified even though the products in question, whilst derived from different raw materials, are capable of being put to the same uses and have the same practical application.
Where by reason of the taxation of synthetic alcohol, it has been impossible to develop profitable production of that type of alcohol on national territory, the application of such tax arrangements cannot be considered as constituting indirect protection of national production of alcohol obtained by fermentation within the meaning of the second paragraph of article 95 of the eec treaty on the sole ground that their consequence is that the product subject to the heavier taxation is in fact a product which is exclusively imported from other member states of the community.
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 W T Ramsay Ltd v Inland Revenue Commissioners; HL 12-Mar-1981 - [1981] 1 All ER 865; [1982] AC 300; [1981] UKHL 1; [1981] STC 174
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 Regina v Inland Revenue Commissioners, ex parte the National Federation of Self-Employed and Small Businesses Ltd; HL 9-Apr-1981 - [1982] AC 617; [1981] UKHL 2; [1981] 2 All ER 93; [1981] 2 WLR 722; [1981] UKHL TC_55_133; [1981] 1 WLR 793; [1981] TR 215; 55 TC 24; [1981] STC 344
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 Inland Revenue Commissioners v Duchess of Portland; 1982 - [1982] STC 149
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Clark (Inspector of Taxes) v Oceanic Contractors Inc [1983] 2 AC 130; [1982] UKHL TC_56_183
16 Dec 1982
HL
Lord Wilberforce, Lord Scarman
Jurisdiction, Taxes Management, Income Tax
HL Income tax, Schedule E - Non-resident employer - Employees working in U.K. sector of North Sea - Whether employer liable to deduct tax from emoluments - Income Tax (Employments) Regulations 1973 - Income and Corporation Taxes Act 1970, s 181 and s 204 - Finance Act 1973, 5 38 - Continental Shelf Act 1964 - A foreign company which was not resident in, but maintained places of business within the United Kingdom, engaged personnel (United Kingdom residents and others) to work on barges and other vessels in the United Kingdom sector and other sectors of the North Sea. The employees were paid in U.S. dollars by cheques drawn in Brussels on a New York bank account. Cheques might be (a) deposited in a bank designated by the employee, (b) seat to any person designated by the employee or (c) delivered to the employee himself on his barge or vessel.
The House considered the principle of statutory interpretation that a statute should be confined to the territory within which it operates. Lord Wilberforce said: "That principle, which is really a rule of construction of statutes expressed in general terms, and which as James LJ said is a "broad principle", requires an enquiry to be made as to the persons with respect to whom Parliament is presumed, in the particular case, to be legislating. Who, it is to be asked, is within the legislative grasp or intendment, of the statute under consideration?" and
Lord Scarman said: "the general principle . . is simply that, unless the contrary is expressly enacted or is so plainly implied that the courts must give effect to it, United Kingdom legislation is applicable only to British subjects or to foreigners who by coming to the United Kingdom, whether for a short or a long time, have made themselves subject to British jurisdiction. Two points would seem to be clear: first, that the principle is a rule of construction only, and secondly, that it contemplates mere presence within the jurisdiction as sufficient to attract the application of British legislation."
Whether and to what extent a law applies in relation to foreigners outside the jurisdiction depends upon who is "within the legislative grasp, or intendment" of the relevant provision.
Income Tax (Employments) Regulations 1973 - Income and Corporation Taxes Act 1970 181 204 - Finance Act 1973 38 - Continental Shelf Act 1964
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Furniss (Inspector of Taxes) v Dawson [1984] 1 All ER 530; [1984] AC 474; [1983] UKHL 4
9 Feb 1983
HL
Lord Brightman, Lord Fraser
Taxes Management
The transfer of shares to a subsidiary as part of a planned scheme immediately to transfer them to an outside purchaser was regarded as a taxable disposition to the outside purchaser rather than an exempt transfer to a group company. In defined conditions, including a preordained series of transactions including steps with no commercial or business purpose apart from the avoidance of a liability to tax, the court must look at the end result of a series of transactions: precisely how it would be taxed depended on the terms of the taxing statute.
Lord Brightman said: "First, there must be a pre-ordained series of transactions, or, if one likes, one single composite transaction. This composite transaction may or may not include the achievement of a legitimate commercial (i.e. business) end . . Secondly, there must be steps inserted which have no commercial (business) purpose apart from the avoidance of a liability to tax--not 'no business effect.' If those two ingredients exist, the inserted steps are to be disregarded for fiscal purposes. The court must then look at the end result. Precisely how the end result will be taxed will depend on the terms of the taxing statute sought to be applied."
Lord Fraser said: “The true principle of the decision in Ramsay was that the fiscal consequences of a pre ordained series of transactions, intended to operate as such, are generally to be ascertained by considering the result of the series as a whole, and not by dissecting the scheme and considering each individual the dual transaction separately.”
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