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.
Judges:
Lord Wilberforce
Citations:
[1978] AC 885, [1978] UKHL TC – 52 – 281, [1978] 1 All ER 962, (1978) 52 Tax Cas 281
Links:
Statutes:
Jurisdiction:
England and Wales
Cited by:
Cited – Jerome v Kelly (Her Majesty’s Inspector of Taxes) HL 13-May-2004
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 . .
Lists of cited by and citing cases may be incomplete.
Capital Gains Tax, Corporation Tax
Updated: 10 June 2022; Ref: scu.196889