A person domiciled in the United States but resident in England paid allowances to her daughter resident in England out of the income of her investments in the United States, by means of a banker’s draft drawn on a London bank payable to the daughter and posted to her in California. The banker’s draft was bought by the mother’s bank in California and debited to her account. The mother was assessed to tax under Case V of Schedule D on the amount of the allowances. The assessment was discharged by the Special Commissioners.
Held: The Special Commissioners held that the gift to the daughter was completed in California, at the latest, when the banker’s draft was posted to her on her mother’s instructions. The judge concluded that the sections only caught income from foreign possessions which is either received by the taxpayer in the United Kingdom or to which he is entitled at the time it comes to the United Kingdom. He specifically rejected the argument for the Crown that if the subject matter of the gift comes to the United Kingdom by direction of the taxpayer it is received by the taxpayer. If there is a gift of foreign income completed outside the United Kingdom the donee may remit the subject matter or any other property representing it to the United Kingdom without a liability to United Kingdom tax being imposed on either the donor or the donee.
Judges:
Lawrence J
Citations:
(1936) 20 TC 229
Cited by:
Cited – Grimm v Newman Chantry Vellacott DFK CA 7-Nov-2002
Accountants appealed a finding of professional negligence. They had advised an american resident in Britain that he could transfer assets to his wife here without adverse tax consequences. At the trial the judge had considered an alternative scheme . .
Lists of cited by and citing cases may be incomplete.
Income Tax
Updated: 29 April 2022; Ref: scu.183429