JM Williams (Trustee In Bankruptcy for RWG Denny) v Revenue and Customs: FTTTx 10 Feb 2014

FTTTx INCOME AND CAPITAL GAINS TAX – decision of tribunal in principle – hearing adjourned for parties to determine figures – subsequent allegations by appellant that tribunal misled by HMRC’s witness – whether misleading evidence – jurisdiction – quantification of income and capital gains tax due – whether jurisdiction to consider interest calculation and charge – relevance to calculation of penalties of settlement offer made by appellant –

[2014] UKFTT 200 (TC)
Bailii
England and Wales

Income Tax, Capital Gains Tax

Updated: 30 November 2021; Ref: scu.521791

W T Ramsay Ltd v Inland Revenue Commissioners: HL 12 Mar 1981

The taxpayers used schemes to create allowable losses, and now appealed assessment to tax. The schemes involved a series of transactions none of which were a sham, but which had the effect of cancelling each other out.
Held: If the true nature of the transactions could be seen by looking at them all together, then that should be done. If the composite transaction produced neither a gain nor a loss, it was a nullity. The schemes should be ignored as artificial and fiscally ineffective. The language of a taxing statute will often have to be given a wide practical meaning to allow the court to have regard to the whole of a series of transactions which were intended to have a commercial unity. Lord Wilberforce (on the interpretation of taxation statutes) ‘What are ‘clear words’ is to be ascertained upon normal principles: these do not confine the courts to literal interpretation. There may, indeed should, be considered the context and scheme of the relevant Act as a whole, and its purpose may, indeed should, be regarded.’ As to the construction of composite transactions: ‘It is the task of the court to ascertain the legal nature of any transaction to which it is sought to attach a tax or a tax consequence and if that emerges from a series or combination of transactions, intended to operate as such, it is that series or combination which may be regarded.’ and ‘The capital gains tax was created to operate in the real world, not that of make-belief . . . 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, there is not such a loss (or gain) as the legislation is dealing with, is in my opinion well and indeed essentially within the judicial function.’

Wilberforce, Fraser of Tullybelton, Russell of Killowen, Roskill, Bridge of Harwich LL
[1981] 1 All ER 865, [1982] AC 300, [1981] UKHL 1, [1981] STC 174
Bailii
England and Wales
Citing:
AppliedChinn v Hochstrasser (Inspector of Taxes) HL 11-Dec-1980
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 . .
AppliedInland Revenue Commissioners v Plummer HL 1-Nov-1979
Although transactions were integrated as part of a preconceived scheme which was commercially marketed and that had no other conceivable purpose than that of saving surtax, the construction of the statute compelled the acceptance of a fiscal result . .
CitedInland Revenue Commissioners v Duke of Westminster HL 7-May-1935
The Duke’s gardener was paid weekly, but to reduce tax, his solicitors drew up a deed in which it was said that the earnings were not really wages, but were an annual payment payable by weekly instalments.
Held: To find out what the true . .

Cited by:
AppliedMoodie v Inland Revenue Commissioners and Another and similar HL 7-Apr-1993
A scheme was devised to sell annuities to charities. They then used the capital sum paid to purchase promissory notes from the charity, which were in turn used to secure annuity payments.
Held: The scheme was entirely self cancelling and void. . .
CitedGriffin v Citibank Investments Ltd ChD 14-Nov-2000
Where there existed properly constituted documents recording a contract, the court could not go behind them to discover the real transaction. The rules in Ramsay is not a special set of principles restricted to issues in determining the legal effect . .
CitedDTE Financial Services Ltd v Wilson (Inspector of Taxes) CA 24-May-2001
A scheme by which an employer paid bonuses to senior staff by purchasing contingent reversionary interests in an overseas trust, and then assigning them to the staff without admitting liability for income tax or national insurance contributions when . .
CitedMcNiven (Inspector of Taxes) v Westmoreland Investments Ltd CA 26-Oct-1998
Cross loans were made between an investment company and pension schemes. The overall effect was to create payments which could be set off against Corporation Tax. They were not a pre-ordained series of transactions where the underlying loans were . .
CitedBarclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes) ChD 22-Jul-2002
The taxpayer sought to claim for capital allowances of andpound;91 million for gas pipelines. The claimant had provided the equipment through a leasing scheme.
Held: The leases were unusual, but did not appear to be merely part of a tax . .
CitedMacDonald (Inspector of Taxes) v Dextra Accessories Ltd and Others ChD 16-Apr-2003
The inspector sought to disallow charging to current tax period payments made by the employer to an employee benefit trust.
Held: The payments were not made and held by the trustees ‘with a view to becoming relevant emoluments’ within the . .
ExplainedMacNiven (Inspector of Taxes) v Westmoreland Investments Ltd HL 15-Feb-2001
The fact that a payment of interest was made only to create a tax advantage did not prevent its being properly claimed. Interest was paid for the purposes of setting it against tax, when the debt was discharged. A company with substantial losses had . .
CitedEnsign Tankers (Leasing) Ltd v Stokes (Inspector of Taxes) HL 6-May-1992
The appellants entered into partnerships with a film production company. By doing so they intended to make available to themselves first year allowances on the capital expenditure incurred. Loan agreements protected them from any eventual loss.
CitedBMBF (No 24) Limited v the Commissioners of Inland Revenue CA 6-Nov-2003
The taxpayer, a non-resident, operated a sale and lease back scheme of machinery to be used in its business within the UK. There had been a chain of leases.
Held: The court had first to identify the ‘relevant lease’. It was the head lease . .
CitedCommissioner of Inland Revenue v Auckland Harbour Board PC 24-Jan-2001
PC (New Zealand) The respondent had created two trusts. The issue was how their income was to be treated for income tax.
Held: They had received no consideration. It was said that the transfers had been . .
CitedCraven v White HL 1988
The inland revenue claimed that several transactions had been arranged for the predominant purpose of obtaining a tax advantage, and that accordingly they should be disregarded. Lord Oliver: ‘[T]he transactions which, in each appeal, the Inland . .
CitedInland Revenue Commissioners v Scottish Provident Institution HL 25-Nov-2004
The parties anticipated a change in the system for taxing gains on options to buy or sell bonds and government securities. An option would be purchased before the change and exercised after the change to create losses which could be set off against . .
CitedCommissioners of Inland Revenue v McGuckian HL 21-May-1997
Steps which had been inserted into a commercial transaction, but which had no purpose other than the saving of tax are to be disregarded when assessing the tax effect of the scheme. The modern approach to statutory construction is to have regard to . .
CitedBarclays Mercantile Business Finance Ltd v Mawson (HM Inspector of Taxes) HL 25-Nov-2004
The company had paid substantial sums out in establishing a gas pipeline, and claimed those sums against its tax as capital allowances. The transaction involved a sale and leaseback arrangement which the special commissioners had found to be a . .
ExplainedInland Revenue v Burmah Oil Co Ltd HL 1982
A series of circular payments which left the taxpayer company in exactly the same financial position as before was not regarded as giving rise to a ‘loss’ within the meaning of the legislation. The ratio of the Ramsay decision was that a loss which . .
RestatedCollector of Stamp Revenue v Arrowtown Assets Ltd 4-Dec-2003
(Hong Kong Final Court of Appeal) The court was asked as to the accounting treatment of interests incurred in the development for the purpose of generating the profits, and therefore whether the relevant Ordinance prohibited the capitalisation of . .
ExtendedFurniss (Inspector of Taxes) v Dawson HL 9-Feb-1983
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 . .
CitedIngram and Palmer-Tomkinson (Executors of the Estate of Lady Jane Lindsay Morgan Ingram Deceased) v Commissioners of Inland Revenue CA 28-Jul-1997
The deceased had first conveyed property to her solicitor. Leases back were then created in her favour, and then the freeholds were conveyed at her direction to her children and grandchildren. They were potentially exempt transfers.
Held: . .
CitedIngram and Another v Commissioners of Inland Revenue HL 10-Dec-1998
To protect her estate from Inheritance Tax, the deceased gave land to her solicitor, but then took back a lease. The solicitor then conveyed the land on freehold on to members of her family.
Held: The lease-back by the nominee was not void as . .
CitedGreenalls Management Ltd v Customs and Excise HL 12-May-2005
Volumes of vodka were transferred from a secure warehouse to a carrier for export. They were diverted, and not exported and the Customs sought the unpaid duty from the warehouse. The Directive provided that duty was payable on the ‘release for . .
CitedBelvedere Court Management Ltd v Frogmore Developments Ltd CA 24-Oct-1995
Landlords had sold flats to Frogmore without serving a section 5 notice under the 1987 Act. Prior to receipt of a purchase notice, Frogmore granted certain leases in the block of flats to another party.
Held: The agreements were upheld, and . .
CitedTotal Network Sl v Revenue and Customs HL 12-Mar-2008
The House was asked whether an action for unlawful means conspiracy was available against a participant in a missing trader intra-community, or carousel, fraud. The company appealed a finding of liability saying that the VAT Act and Regulations . .
CitedHarding v Revenue and Customs CA 23-Oct-2008
Lapsed Currency conversion option lost status
The taxpayer appealed his assessment to Capital Gains Tax on his redemption of loan notes arising following the sale of his computer company. He said that they were qualifying corporate bonds. The question was whether a security in which a currency . .
CitedScottish Widows Plc v Revenue and Customs SC 6-Jul-2011
The taxpayer insurance company had transferred sums from accounts designated as Capital Reserves. The Revenue said that these were properly part of the profit and loss accounts for the respective tax years, and chargeable receipts.
Held: The . .
CitedCampbell v Inland Revenue Commissioners SCIT 6-Jul-2004
SCIT INCOME TAX – Anti-Avoidance – Relevant discounted security – Loss on gift to wife – Subscription for security and gift part of scheme to produce loss – Avoidance not the Appellant’s sole purpose in . .
CitedCraven (IOT) v White (Stephen); Inland Revenue Commissioners v Bowater Property Developments HL 1989
In Craven, the taxpayers owned shares in Q Ltd. In early 1976 they began to negotiate with C Ltd for a merger of the two companies and steps were taken to establish an Isle of Man holding company to act as a vehicle for the taxpayers’ shares should . .
CitedJohn Mander Pension Trustees Ltd v Revenue and Customs SC 29-Jul-2015
The pension scheme had been approved, but that approval later withdraw. HMRC issued assessment for the years in which it had been approved. The taxpayer argued that such assessments applied to the date with effect from which the approval is . .
CitedShop Direct Group v Revenue and Customs SC 17-Feb-2016
The Court considered the interpretation of the sections which applied corporation tax to post-cessation receipts. Companies had received from the Inland Revenue substantial repayments of VAT together with interest. There had been reorganisations of . .
CitedUBS Ag and Another v Revenue and Customs SC 9-Mar-2016
UBS AG devised an employee bonus scheme to take advantage of the provisions of Chapter 2 of the 2003 Act, with the sole purpose other than tax avoidance, and such consequential advantages as would flow from tax avoidance. Several pre-ordained steps . .
CitedRFC 2012 Plc (Formerly The Rangers Football Club Plc) v Advocate General for Scotland SC 5-Jul-2017
The Court was asked whether an employee’s remuneration is taxable as his or her emoluments or earnings when it is paid to a third party in circumstances in which the employee had no prior entitlement to receive it himself or herself.
Held: The . .
CitedS Franses Limited v The Cavendish Hotel (London) Ltd SC 5-Dec-2018
The question which arises on this appeal is whether it is open to the landlord to oppose the grant of a new business tenancy if the works which he says that he intends to carry out have no purpose other than to get rid of the tenant and would not be . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax, Taxes Management

Leading Case

Updated: 29 November 2021; Ref: scu.181330

Weston v Revenue and Customs: FTTTx 16 Dec 2013

FTTTx CAPITAL GAINS TAX – negligible value claim – asset a certificate of deposit denominated in sterling in an overseas bank which accounted in US dollars – the bank went into administration and later liquidation and was the subject of a complaint by the Securities and Exchange Commission alleging fraud – whether asset was a debt denominated in sterling – held it was – whether the appellant’s claim in the liquidation in respect of the CD was a separate asset for CGT purposes – held it was not – appeal dismissed

[2014] UKFTT 11 (TC)
Bailii

Capital Gains Tax

Updated: 28 November 2021; Ref: scu.519585

Snell v Revenue and Customs: SCIT 5 Apr 2006

CAPITAL GAINS TAX – exchange of shares for loan stock – TCGA 1993 s 137 – whether the exchange was effected for bona fide commercial reasons – yes -whether one of the main purposes of the scheme or arrangements including the exchange was avoidance of capital gains tax – yes – appeal dismissed

[2006] UKSPC SPC00532
Bailii
England and Wales

Capital Gains Tax

Updated: 28 November 2021; Ref: scu.241239

Harvey’s Jersey Cream Ltd v Revenue and Customs: FTTTx 14 Nov 2013

FTTTx CGT – EIS – proceeds of share subscription invested in partnership of which company already a member and paid out to other partners – whether monies raised for the purpose of, or employed in a qualifying business activity – para 1(2)(f) and (g) Sch 5B TCGA 1992.
Held: no.

[2013] UKFTT 663 (TC)
Bailii

Capital Gains Tax

Updated: 26 November 2021; Ref: scu.518612

Dickinson v Revenue and Customs: FTTTx 30 Sep 2013

FTTTx Joint application by Appellant and Respondent under Section 28Z TMA 1970 – Capital Gains tax – Private residence relief – Sale of part of grounds for residential development -Construction work commenced before contractual disposal – Whether land fell to be regarded as part of grounds -Yes – Whether relief due – Yes

[2013] UKFTT 653 (TC)
Bailii
Taxes Management Act 1970 28Z

Capital Gains Tax

Updated: 26 November 2021; Ref: scu.518590

Moore v Revenue and Customs: FTTTx 14 Aug 2013

FTTTx CAPITAL GAINS TAX – disposal of a residential property after 8 months of occupation – whether the property had been the appellant’s residence – whether his occupation of the property had the necessary degree of permanence, continuity or expectation of continuity – held on the evidence that it did not – sections 222 and 223 Taxation of Chargeable Gains Act 1992 not applicable – appeal dismissed

[2013] UKFTT 433 (TC)
Bailii
Taxation of Chargeable Gains Act 1992 222 223

Capital Gains Tax

Updated: 20 November 2021; Ref: scu.515215

Shing Cheung Mak v Revenue and Customs: FTTTx 30 Jul 2013

FTTTx Capital gains tax – taper relief – gain arising on disposal of residential property used as accommodation for workers in restaurant – whether business asset taper relief available – paragraph 5(1A) of Schedule A1, Taxation of Chargeable Gains Act 1992 – whether property used wholly or partly for the purposes of the restaurant trade – yes – business asset taper relief available – appeal allowed

[2013] UKFTT 417 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 20 November 2021; Ref: scu.515192

Ridpath v Revenue and Customs: FTTTx 15 Jul 2013

FTTTx Capital gains tax – disposal of two properties – agent’s figures did not provide a deduction for property improvements – no details forthcoming – bank account shows numerous withdrawals for the period prior to sales – Appellant cannot provide details of what expenditure incurred – impossible to conclude how much expenditure incurred – appeal dismissed

[2013] UKFTT 389 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 18 November 2021; Ref: scu.514183

Chahal v Revenue and Customs: FTTTx 1 Jul 2013

FTTTx Capital Gains Tax – allowable deductions from disposal proceeds – purchase of one half share in property followed by later purchase of the other half share – latter transaction treated in tax return for the year in question as disposal of existing half share and acquisition of entire property, resulting in small tax payment – whether, on a later disposal of the entire property, the Appellant should be allowed to deduct market value of entire property at time of 100% acquisition – held no – appeal dismissed

[2013] UKFTT 373 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 17 November 2021; Ref: scu.513510

Mateides and Another v Revenue and Customs: FTTTx 13 Jun 2013

CAPITAL GAINS TAX – Business Asset – Taper Relief – HMRC agreed a four bedroom house used for business for two years – dispute concerned the remaining years – no evidence that the house was used for business – not entitled to business taper relief – Appeal dismissed – amendment to self assessment returns confirmed

[2013] UKFTT 347 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 17 November 2021; Ref: scu.513492

Bowring and Another v Revenue and Customs: FTTTx 25 Jun 2013

FTTTx CAPITAL GAINS TAX – whether distributions to beneficiaries from new resident trust to be matched to gains in original offshore trust – HMRC accepted that flip-flop mark II scheme effective so gains not arising in new trust – whether s 97(5) TCGA 1992 applied so that the distributions to beneficiaries from the new trust were nevertheless ‘from . . indirectly’ the original trust – yes as on facts new trust was essentially and viewed realistically a continuation of the original trust – assessments upheld

[2013] UKFTT 366 (TC)
Bailii

Capital Gains Tax

Updated: 17 November 2021; Ref: scu.513478

Price and Others v Revenue and Customs: FTTTx 30 Apr 2013

FTTTx CGT -artificial scheme to create allowable loss – non commercial exercise of options – ss17 and 144 TCGA; s144ZA – whether disapplied by s 144ZB – whether a ‘securities option’ within Ch 5 Pt 7 ITEPA.
S 149AA TCGA- whether deed poll an arrangement for conversion of shares- whether employment related securities.
Ch 5 Pt 7 ITEPA: whether option acquired by reason of employment of another person; whether retrospective addition to s 420(8) has effect.
Income Tax – s 574 TA 88 – CGT loss available against income -whether qualifying trading company- whether sale of shares bargain at arm’s length.

[2013] UKFTT 297 (TC)
Bailii

Capital Gains Tax, Income Tax

Updated: 17 November 2021; Ref: scu.513429

Price and Others v Revenue and Customs: UTTC 17 Apr 2015

CGT – artificial scheme to create allowable loss ? whether consideration given wholly or exclusively for the acquisition of asset – s. 38(1)(a) TCGA Appeals – alternative arguments by Respondents – whether requiring permission to appeal

[2015] UKUT 164 (TCC), [2015] BTC 516, [2015] STC 1975
Bailii
England and Wales

Capital Gains Tax

Updated: 12 November 2021; Ref: scu.549085

Essack v Revenue and Customs: FTTTx 7 Feb 2014

FTTTX Employment income – payment under Compromise Agreement – whether attributable to future right to receive shares – whether taxable under s 22 TCGA-held – contingent right to be offered shares in the future not an asset for CGT purposes – whole of sum taxable as employment income – appeal dismissed.

Rachel Short TJ
[2014] UKFTT 159 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 11 November 2021; Ref: scu.521779

Regan v Revenue and Customs: FTTTx 23 Apr 2014

FTTTx Capital Gains Tax penalties – complaint that penalties calculated on basis of incorrect assessments – assessments appealed against and appeal lost – permission to appeal refused – impossibility of going behind previous tribunal decision – taxpayer’s remedy – appeal dismissed

[2014] UKFTT 390 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 11 November 2021; Ref: scu.525378

Pattullo v Revenue and Customs: FTTTx 26 Aug 2014

FTTTx CAPITAL GAINS TAX – Discovery assessment; tax avoidance scheme involving capital redemption policies; whether HMRC officer discovered that chargeable gains ought to have been assessed or relief refused, whether an assessment was insufficient, or whether any relief given was excessive; whether officer of HMRC could not have been reasonably expected to be aware of the chargeable gains, insufficiency or excess relief; TMA 1970 s 29; what constitutes such awareness; tests to be applied; Res Judicata and judicial review proceedings; abuse of process; application to set aside Direction refusing to allow Grounds of Appeal to be amended; The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 Rule 6(5); Appeal dismissed

[2014] UKFTT 841 (TC)
Bailii
Taxes Management Act 1970 29
England and Wales

Capital Gains Tax

Updated: 11 November 2021; Ref: scu.536405

Sehgal v Revenue and Customs: FTTTx 19 Nov 2013

FTTTX CAPITAL GAINS TAX – Claim for relief for overpaid tax – Schedule 1AB Taxes Management Act 1970 – return showing disposal of shares giving rise to a chargeable gain – capital gains tax paid – taxpayer later claiming that the transaction was fraudulent and the capital gains tax should be repaid to her – whether the shares had been beneficially owned by the taxpayer – found on the balance of probabilities that they had – held no overpayment of capital gains tax – Revenue’s alternative argument based on taxpayer’s failure to amend the return in time (Case C, paragraph 2(4), Schedule 1AB TMA) rejected on the basis that if there had been an overpayment it was for HMRC to prove that the taxpayer knew or ought reasonably to have known of that fact before the time for amendment of the return expired and they had not proved that fact – appeal dismissed

[2013] UKFTT 673 (TC)
Bailii
Taxes Management Act 1970
England and Wales

Capital Gains Tax, Taxes Management

Updated: 10 November 2021; Ref: scu.518627

Barnett v Revenue and Customs: FTTTx 21 Jan 2010

FTTTx CAPITAL GAINS TAX – Adjustment to self-assessment producing an increased chargeable gain for the year 2005/06 by reference to an agreed downwards adjustment in the acquisition cost of a property disposed of – whether an allowable loss on a disposal of shares not yet made could bet set off against the chargeable gain to reduce the additional tax payable to nil – held, no – the Tribunal had no jurisdiction to adjudicate on allegations that the Appellant had been treated unreasonably or unfairly by the Respondents

John Walters QC
[2010] UKFTT 39 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 10 November 2021; Ref: scu.408873

Grays Timber Products Ltd v Revenue and Customs: SC 3 Feb 2010

An assessment to income tax had been raised after the employee resold shares in the company issued through the employees’ share scheme at a price which the Revenue said was above the share value. The company appealed against a finding that tax was payable.
Held: The appeal failed. The Revenue should calculate the price which might be agreed between a hypothetical purchaser and seller making proper allowance for the particular characteristics of the seller and of the shareholding. There was real doubt as to whether Parliament had, in Part 7, enacted a scheme which drew a coherent and consistent distinction between intrinsic and extrinsic rights attaching to shares and other financial instruments.
Lord Walker explained that the provisions of Part 7 reflect three different legislative purposes: ‘First there is Parliament’s recognition that it is good for the economy, and for social cohesion, for employees to own shares in the company for which they work. Various forms of incentive schemes are therefore encouraged by favourable tax treatment
Second, if arrangements of this sort are to act as effective long-term incentives, the benefits which they confer have to be made contingent, in one way or another, on satisfactory performance. This creates a problem because it runs counter to the general principle that employee benefits are taxable as emoluments only if they can be converted into money, but that if convertible they should be taxed when first acquired. That principle was stated by Lord Radcliffe in Abbott v Philbin [1961] AC 352, 379
The principle of taxing an employee as soon as he received a right or opportunity which might or might not prove valuable to him, depending on future events, was an uncertain exercise which might turn out to be unfair either to the individual employee or to the public purse. At first the uncertainty was eased by extra-statutory concessions. But Parliament soon recognised that in many cases the only satisfactory solution was to wait and see, and to charge tax on some ‘chargeable event’ (an expression which recurs throughout Part 7) either instead of, or in addition to, a charge on the employee’s original acquisition of rights.
That inevitably led to opportunities for tax avoidance. The ingenuity of lawyers and accountants made full use of the ‘wait and see’ principle embodied in these changes in order to find ways of avoiding or reducing the tax charge on a chargeable event, which might be the occasion on which an employee’s shares became freely disposable (Chapter 2) or the occasion of the exercise of conversion rights (Chapter 3). The third legislative purpose is to eliminate opportunities for unacceptable tax avoidance. Much of the complication of the provisions in Part 7 (and especially Chapters 3A, 3B, 3C and 3D) is directed to counteracting artificial tax avoidance.’
Lord Hope commented that ‘if there is any theme in the Act it is one of anti-avoidance and the closing down of perceived tax loopholes’.

Lord Hope of Craighead, Deputy President, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood and Lord Kerr of Tonaghmore
[2010] UKSC 4, Times 04-Feb-2010, UKSC 2009/0044, [2010] WLR (D) 21, [2010] STI 393, [2010] 2 All ER 1, 2010 GWD 8-145, [2010] BTC 112, [2010] STC 782
Bailii, SC Summ, SC, WLRD, Bailii Summary
Income Tax (Earnings and Pensions) Act 2003 446X(b), Taxation of Chargeable Gains Act 1992
Scotland
Citing:
CitedGrey and Another (Hunter’s Nominees) v Inland Revenue Commissioners; Orse Gray v IRC HL 2-Nov-1959
The House considered whether certain instruments which were presented for adjudication to stamp duty under section 13 of the Stamp Act 1891, are or are not chargeable with ad valorem duty.
Held: The word ‘disposition’ is to be given its . .
At SCSGrays Timber Products Ltd v HM Revenue and Customs SCS 13-Feb-2009
The company appealed against a determination by the defendants that when an employee had sold his shares, it had done so at a price over the market value, and in doing so, incurred a charge to income tax.
Held: The appeal failed. . .
CitedLynall v Inland Revenue Commissioners HL 2-Jan-1971
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 . .
CitedAbbott v Philbin (Inspector of Taxes) HL 21-Jun-1960
A company’s senior employees had been given an option to subscribe for its shares at the then current market price, the option being exercisable at any time within the next ten years. The employees were thus incentivised to increase the company’s . .
CitedAttorney-General for Ireland v Jameson CA 1905
The court was asked as to the valuation of shares. The shares were subject to restrictions on transfer.
Held: The price which the shares would fetch if sold on the open market should reflect the terms on which the purchaser would be entitled . .
CitedSalvesen’s Trustees v Inland Revenue Commissioners SCS 1930
The court considered the valuation of shares in a notional purchase. The company’s articles of association contained a provision that the company might at any time, by extraordinary resolution, resolve that any shareholder, other than a director or . .
CitedInland Revenue Commissioners v Crossman HL 1937
For a valuation for estate taxes, the value is what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date.
Lord Russell of Killowen said that a share is the interest of a . .
CitedBML Group Ltd v Harman and Another CA 8-Apr-1994
Shareholders of one class sought an order under section 371 which would have had the effect of overriding the class rights of another shareholder. The meeting was proposed to remove two directors who did not have the protection of a shareholder’s . .
CitedWelton v Saffery 1897
Lord Davey said: ‘Of course, individual shareholders may deal with their own interests by contract in such way as they may think fit. But such contracts, whether made by all or some only of the shareholders, would create personal obligations, or an . .
CitedRussell v Northern Bank Development Corporation Limited and Others HL 15-Jul-1992
Four directors of the company agreed with each other not to create further share capital. A director seeking to enforce the agreement, appealed against a judgment that the agreement was invalid in seeking to fetter the company’s stautory powers.
CitedIn re Sutherland, dec’d; Winter v Inland Revenue Commissioners HL 1963
The concept of a contingent liability was considered.
Held: In Scots law, a contingent liability is a liability which, by reason of something done by the person bound, may or may not arise depending on the happening of a future event.
CitedAlexander v Inland Revenue Commissioners CA 1991
The deceased’s flat in the Barbican was to be valued for Capital Transfer Tax. She bought it under right to buy at a substantial discount but subject to a time limited charge for that discount. She died within a year. The flat was subject to a . .
CitedIn re Lynall deceased CA 1968
Harman LJ said: ‘The sale envisaged by the section is, as is agreed, not a real but a hypothetical sale, and must be taken to be a sale between a willing vendor and a willing purchaser: see, for instance, the speech of Lord Guest in In re Sutherland . .
CitedDuke of Buccleuch v Inland Revenue Commissioners HL 1967
When a valuation was to be attributed to a property the test must be applied to the property as it actually existed and not to some other property, even if in real life a vendor would have been likely to make some changes or improvements before . .
CitedBrady v Brady HL 1988
An employment agreement contravening section 151 of the 1985 Act is unenforceable. The obvious mischief to which section 151 is directed is the case of a bidder financing his bid from the funds of the company acquired. The larger purpose had to be . .

Cited by:
CitedUBS Ag and Another v Revenue and Customs SC 9-Mar-2016
UBS AG devised an employee bonus scheme to take advantage of the provisions of Chapter 2 of the 2003 Act, with the sole purpose other than tax avoidance, and such consequential advantages as would flow from tax avoidance. Several pre-ordained steps . .

Lists of cited by and citing cases may be incomplete.

Income Tax, Capital Gains Tax

Leading Case

Updated: 10 November 2021; Ref: scu.396588

Abacus Trust Company (Isle of Man) Ltd and Another v National Society for the Prevention of Cruelty to Children: ChD 17 Jul 2001

abacus_nspccChD01

The claimants were beneficiaries, trustee and protector of a trust fund. In order to mitigate Capital Gains Tax liability they sought advice, and, following that advice, entered into a deed of gift in favour of the respondent charity. The deed needed to be dated in the new tax year, but was dated for the previous year. They sought a declaration that the deed was void ab initio, the directors having failed to address a relevant consideration.
Held: The declaration was granted. The matters which could, if present, be taken into account, can include factors which might vitiate the intended legal effect of the deed, including the fiscal effect. It was unrealistic to divorce the several steps from each other. Trustees must consider the fiscal consequences of their acts, and a failure to do so was capable of leading to the application of ‘the Rule in Hastings-Bass’.

Potter J
Gazette 13-Sep-2001, Times 25-Sep-2001, [2001] EWHC B2 (Ch), [2001] STI 1225, [2001] STC 1344, [2001] WTLR 953, [2002] BTC 178, (2000-01) 3 ITELR 846
Bailii
Citing:
CitedRe Hastings-Bass; Hastings v Inland Revenue CA 14-Mar-1974
Trustees of a settlement had exercised their power of advancement under the section, in order to save estate duty by transferring investments to be held on the trusts of a later settlement. However the actual effect of the advancement was that the . .
appliedGreen v Cobham ChD 19-Jan-2000
cw The Trustees had overlooked the fact that a Will Trust and two sub-settlements together constituted a single composite settlement for the purposes of CGT with a single body of trustees. As a result of his . .

Cited by:
AppliedBurrell and Sharman v Burrell, Shore, Tyrrell, etc ChD 23-Feb-2005
burrell_burrellChD05
Shares were appointed by trustees in the mistaken belief that they attracted business property relief from Inheritance tax. They sought to set aside the appointment.
Held: Mann J applied the rule in Stannard v Fisons Pensions Trust and . .
CitedFutter and Another v Futter and Others ChD 11-Mar-2010
Various family settlements had been created. The trustees wished to use the rule in Hastings-Bass to re-open decisions they had made after receiving incorrect advice.
Held: The deeds were set aside as void. The Rule in Hastings-Bass derives . .

Lists of cited by and citing cases may be incomplete.

Trusts, Capital Gains Tax

Updated: 10 November 2021; Ref: scu.163314

Weston v Garnett (HM Inspector of Taxes): CA 16 Jun 2005

Convertible loan notes had been issued as a channel for future gains.
Held: The loan notes were not a normal commercial loan as defined in Schedule 18 to the 1988 Act, and therefore did not fall within the section so as to allow qualification for exemption from liability to tax. The conditions relating to ‘normal commercial loan’ were designed to ensure that the exemption only extended to bonds that were genuinely traded; and more generally to ensure that the exemption could not be used as a vehicle for avoidance:

Pill, Chadwick, Buxton LJJ
[2005] EWCA Civ 742, Times 29-Jun-2005, [2005] STC 1134, (2005) 77 TC 650, [2005] BTC 342
Bailii
Taxation of Chargeable Gains Tax Act 1992 115 117, Finance Act 1976 Sch 14, Income and Corporation Taxes Act 1988 Sch 18 p 1(5)
England and Wales
Citing:
Appeal fromWeston v Garnett (Inspector of Taxes) ChD 25-Jun-2004
The taxpayer entered into a scheme for the issue and disposal of corporate loans. He appealed a finding that the loans were caught by section 115 which disallowed exemption because they did not represent a normal commercial loan.
Held: It was . .

Cited by:
CitedHarding v Revenue and Customs CA 23-Oct-2008
Lapsed Currency conversion option lost status
The taxpayer appealed his assessment to Capital Gains Tax on his redemption of loan notes arising following the sale of his computer company. He said that they were qualifying corporate bonds. The question was whether a security in which a currency . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Updated: 10 November 2021; Ref: scu.226734

Wallace v Revenue and Customs: FTTTx 4 Jul 2012

FTTTx TYPE OF TAX – capital gains tax – returns admittedly omitted chargeable gains -assessment raised – not properly appealed for over 2 years – whether permission should be granted to bring a late appeal – balancing exercise undertaken – held permission should not be granted – appeal struck out

John Walters QC J
[2012] UKFTT 433 (TC)
Bailii
England and Wales
Cited by:
See AlsoWallace v Revenue and Customs FTTTx 12-Apr-2013
Procedure – dismissed out of time . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Updated: 10 November 2021; Ref: scu.462833

Mertrux Ltd v Revenue and Customs: FTTTx 21 Jun 2011

Capital gains tax – claim by Appellant for rollover relief on the basis that the consequential gain arising on the sale of its business was wholly in respect of the goodwill – appeal against HMRC’s decision to disallow part of the Appellant’s claim as being compensation for the termination of its Mercedes dealership – appeal allowed

[2011] UKFTT 398 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 10 November 2021; Ref: scu.443130

Harding v Revenue and Customs: CA 23 Oct 2008

Lapsed Currency conversion option lost status

The taxpayer appealed his assessment to Capital Gains Tax on his redemption of loan notes arising following the sale of his computer company. He said that they were qualifying corporate bonds. The question was whether a security in which a currency conversion option has lapsed, becomes (as the taxpayer contended) for the purposes of section 117(1), at the moment of lapse, ‘a security . . in respect of which no provision is made for conversion into, or redemption in, a currency other than sterling.’ The Revenue contended that that status was lost on the currency conversion.
Held: The appeal failed. ‘the key to the interpretation of section 117(1)(b) is the word ‘provision’. If one were to ask whether, on the date of issue, provision is made ‘in respect of’ the security (meaning for this purpose the agreement represented by the Loan Notes and the terms embodied in them) there would, of course, be no doubt on any possible view.
But if the same question were to be asked at the date when the currency conversion right lapsed or when the Loan Notes were redeemed there would, in my view, be the same answer, namely that ‘provision’ is made for conversion, even though the right can no longer be exercised. In my judgment the word ‘provision’ is a reference to the terms of the agreement, and not simply to subsisting rights. There was no need for section 117(1)(b) to have the phrase ‘at all times’ because it was looking to the terms of the agreement and not to rights which may have existed under it from time to time.
Consequently, there is no contrast here between a literal construction and the purpose of the legislation, nor any need for a special construction to avoid anomalies. There is no anomaly, and Mr Harding’s argument is misconceived. ‘

Rix LJ, Richards LJ, Lawrence Collins LJ
[2008] EWCA Civ 1164, [2008] BTC 772, [2008] STC 3499, [2008] STI 2322
Bailii
Taxation of Chargeable Gains Act 1992 117
England and Wales
Citing:
At SCITHarding v Revenue and Customs SCIT 15-Mar-2007
SCIT Capital Gains Tax – qualifying corporate bonds (QCBs) – shares exchanged for loan notes with foreign currency redemption option – section 135 TCGA applying to exchange – loan notes not QCBs on exchange – . .
Appeal fromHarding v HM Revenue and Customs ChD 30-Jan-2008
In section 117 the word ‘security’ identified an asset in the nature of an investment. It was used as meaning something distinct from the debt on it referred to in section 117(1)(a), but it was not simply a reference to the document which evidenced . .
CitedWeston v Garnett (HM Inspector of Taxes) CA 16-Jun-2005
Convertible loan notes had been issued as a channel for future gains.
Held: The loan notes were not a normal commercial loan as defined in Schedule 18 to the 1988 Act, and therefore did not fall within the section so as to allow qualification . .
CitedW T Ramsay Ltd v Inland Revenue Commissioners HL 12-Mar-1981
The taxpayers used schemes to create allowable losses, and now appealed assessment to tax. The schemes involved a series of transactions none of which were a sham, but which had the effect of cancelling each other out.
Held: If the true nature . .
CitedInland Revenue Commissioners v Luke HL 1963
The House applied the literal approach to statutory interpretation. However there may be cases where ‘to achieve the obvious intention and produce a reasonable result [the court] must do some violence to the words.’
Lord Reid said: ‘How, then, . .
CitedMangin v Commissioner of Inland Revenue PC 1971
Lord Donovan considered the rules for interpretation of taxation statutes and said: ‘Thirdly, the object of the construction of a statute being to ascertain the will of the legislature it may be presumed that neither injustice nor absurdity was . .
CitedRevenue and Customs v Bank of Ireland Britain Holdings Ltd CA 8-Feb-2008
. .
CitedTaylor Clark International Ltd v Lewis (Inspector of Taxes) ChD 24-Mar-1997
Currency fluctuation losses arising from a loan to a subsidiary overseas company were not allowable against capital gains tax. The words ‘the debt on a security’ in section 117(1)can refer to an obligation to pay or repay embodied in the Loan Note, . .
CitedJenks v Dickinson (Inspector of Taxes) ChD 16-Jun-1997
Legislation which created a clear anomaly can be interpreted so as to avoid the anomaly if the words used are sufficiently ambiguous as to allow an alternative construction.
Neuberger J discussed the case of Marshall v Kerr, saying: ‘It appears . .
CitedBarclays Mercantile Business Finance Ltd v Mawson (HM Inspector of Taxes) HL 25-Nov-2004
The company had paid substantial sums out in establishing a gas pipeline, and claimed those sums against its tax as capital allowances. The transaction involved a sale and leaseback arrangement which the special commissioners had found to be a . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Updated: 09 November 2021; Ref: scu.277142

Johnston Publishing (North) Ltd v HM Revenue and Customs: ChD 14 Mar 2007

The court was asked as to the applicability or not of deeming provisions in relation to the taxation of chargeable gains arising out of what may or may not be group transactions, and in particular the meaning and effect, in context, of the word ‘associated’ where it appears for the second time in section 179(2).

Lindsay J
[2007] EWHC 512 (Ch)
Bailii
Taxation of Chargeable Gains Act 1992 178 179(2)
England and Wales

Capital Gains Tax

Updated: 02 November 2021; Ref: scu.250603

Roome v Edwards: HL 5 Feb 1981

HL Capital gains tax – Trustees of fund appointed out of main settlement under special powers- – Whether liable for chargeable gain accruing to trustees of unappointed residue – Finance Act 1965, s 25(11) – Sch 10, para 12.
A claim was made for the payment of Capital Gains Tax. It was material to that claim to decide whether the exercise of a power of appointment contained in a settlement gave rise to a settlement separate from the main settlement.
Lord Wilberforce (with whose speech three of the other four Law Lords agreed, Lord Roskill delivering a separate speech) spoke generally: ‘There are a number of obvious indicia which may help to show whether a settlement, or a settlement separate from another settlement, exists. One might expect to find separate and defined property; separate trusts; and separate trustees. One might also expect to find a separate disposition bringing the separate settlement into existence. These indicia may be helpful, but they are not decisive. For example, a single disposition, eg, a will with a single set of trustees, may create what are clearly separate settlements, relating to different properties, in favour of different beneficiaries, and conversely separate trusts may arise in what is clearly a single settlement, e.g. when the settled property is divided into shares. There are so many possible combinations of fact that even where these indicia or some of them are present, the answer may be doubtful, and may depend upon an appreciation of them as a whole.
Since ‘settlement’ and ‘trusts’ are legal terms, which are also used by business men or laymen in a business or practical sense, I think that the question whether a particular set of facts amounts to a settlement should be approached by asking what a person, with knowledge of the legal context of the word under established doctrine and applying this knowledge in a practical and common-sense manner to the facts under examination, would conclude. To take two fairly typical cases. Many settlements contain powers to appoint a part or a proportion of the trust property to beneficiaries: some may also confer power to appoint separate trustees of the property so appointed, or such power may be conferred by law: see Trustee Act 1925, section 37. It is established doctrine that the trusts declared by a document exercising a special power of appointment are to be read into the original settlement: see Muir (or Williams) v Muir [1943] AC 468. If such a power is exercised, whether or not separate trustees are appointed, I do not think that it would be natural for such a person as I have presupposed to say that a separate settlement had been created: still less so if it were found that provisions of the original settlement continued to apply to the appointed fund, or that the appointed fund were liable, in certain events, to fall back into the rest of the settled property. On the other hand, there may be a power to appoint and appropriate a part or portion of the trust property to beneficiaries and to settle it for their benefit. If such a power is exercised, the natural conclusion might be that a separate settlement was created, all the more so if a complete new set of trusts were declared as to the appropriated property, and if it could be said that the trusts of the original settlement ceased to apply to it. There can be many variations on these cases each of which will have to be judged on its facts.’

Lord Wilberforce, Lord Roskill
[1982] AC 279, [1981] UKHL TC – 54 – 359, [1981] UKHL TC – 54 – 359, [1981] 1 All ER 736, 54 TC 359, [1981] 2 WLR 268, [1982] AC 279
Bailii
Trustee Act 1925 37
England and Wales
Cited by:
CitedTrennery v West (Inspector of Taxes) HL 27-Jan-2005
The House considered the application of the section to ‘flip-flop trusts’. The section allocated liability to charge on gains within a settlement under certain circumstances onto the settlor, and at his rate of tax. Assets were allocated to two . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax, Trusts

Leading Case

Updated: 02 November 2021; Ref: scu.222084

Daniel v Revenue and Customs: FTTTx 10 Feb 2014

FTTTx Capital Gains Tax – Whether the Appellant’s employment in the tax year 1999-2000 involved ‘full-time work abroad’, and thus sustained his claim to be non-UK resident for the year – whether the Appellant had been responsible for ‘negligent conduct’ in filing his relevant tax return and claiming to be non-UK resident, so validating the assessment that was otherwise ‘out of time’ – Appeal dismissed

Nowlan TJ
[2014] UKFTT 173 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 02 November 2021; Ref: scu.521777

Moore v Revenue and Customs: FTTTx 21 Sep 2010

FTTTx CAPITAL GAINS TAX – Relief on disposal of private residence – section 222 TCGA – whether property occupied by the Appellant was at any time in his period of ownership his only or main residence – period of occupation in question was less than 3 months immediately after purchase and was spent by the Appellant in effecting renovations – held on the facts that the occupation lacked the assumption of permanence, degree of continuity and expectation of continuity that would turn it into ‘residence’ – property subsequently let out and Tribunal found that the Appellant’s intention was to renovate it for letting and not for residence – Appeal dismissed

John Walters QC
[2010] UKFTT 445 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 02 November 2021; Ref: scu.426583

Revenue and Customs v Trigg (A Partner of Tonnant Llp): UTTC 2 Apr 2016

UTTC CAPITAL GAINS TAX – qualifying corporate bonds (QCBs) – whether provisions in bond instruments for redenomination of sterling bonds to euros (or another currency) on adoption by the UK of the euro (or other currency) as its lawful currency prevented the bonds from being QCBs – TCGA 1992, s 117(1)(b) and s 117(2)(b)

[2016] UKUT 165 (TCC)
Bailii
England and Wales
Citing:
Appeal fromTrigg v Revenue and Customs FTTTx 20-Oct-2014
FTTTx CAPITAL GAINS TAX – whether a bond a QCB – bond had provision for conversion to euro if UK joined monetary union – bond a QCB . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Leading Case

Updated: 02 November 2021; Ref: scu.562436

Commission v United Kingdom: ECJ 13 Nov 2014

ECJ Judgment – Failure of a Member State to fulfil obligations – Freedom of establishment – Free movement of capital – Articles 49 TFEU and 63 TFEU – Articles 31 and 40 of the EEA Agreement – National tax legislation – Attribution of gains to participators in close companies – Different treatment of resident and non-resident companies – Wholly artificial constructions – Proportionality

A. O Caoimh, P
C-112/14, [2014] EUECJ C-112/14, ECLI:EU:C:2014:2369, [2014] WLR(D) 483, [2014] BTC 51, [2015] STC 591, [2014] STI 3297, [2015] 1 CMLR 54
Bailii, WLRD
Taxation of Chargeable Gains Act 1992 13
European

Capital Gains Tax

Updated: 01 November 2021; Ref: scu.538756

Sieff v Fox: ChD 23 Jun 2005

The advisers to trustees wrongly advised the trustees about the tax consequences of exercising a power of appointment in a certain way. As a result a large unforeseen Capital Gains Tax liability arose. The trustees sought to set aside the appointment in reliance on the rule in Hastings-Bass. It was also sought to avoid the transaction on account of a mistake by an individual personally.
Held: Lloyd LJ upheld the claim under both heads, summarising the Hastings-Bass principle: ‘(i) The best formulation of the principle seems to me to be this. Where trustees act under a discretion given to them by the terms of the trust, in circumstances in which they are free to decide whether or not to exercise that discretion, but the effect of the exercise is different from that which they intended, the court will interfere with their action if it is clear that they would not have acted as they did had they not failed to take into account considerations which they ought to have taken into account, or taken into account considerations which they ought not to have taken into account . .
(iii) It does not seem to me that the principle applies only in cases where there has been a breach of duty by the trustees, or by their advisers or agents, despite what Lightman J. said in Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409.
(iv) His conclusion that, if the principle is satisfied, the act in question is voidable rather than void is attractive, but seems to me to require further consideration, in the light of earlier authority.
(v) I am in no doubt that, as a general proposition, fiscal consequences are among the matters which may be relevant for the purposes of the principle.’

Lloyd LJ
[2005] 1 WLR 3811, [2005] EWHC 1312 (Ch)
Bailii
England and Wales
Citing:
CitedStannard v Fisons Pension Trust Limited CA 1991
Fisons had sold their fertiliser division to Norsk Hydro. Acting on advice of actuaries and thinking that the fund was in deficit, the trustees made a transfer to a new fund to provide for pensions of transferring employees in accordance with a . .
CitedMettoy Pension Trustees v Evans ChD 1990
Where a trustee acts under a discretion given to him by the terms of the trust the court will interfere with his action if it is clear that he would not have so acted as he did had he not failed to take into account considerations which he ought to . .
CitedMihlenstedt v Barclays Bank International CA 1989
The company’s pension scheme provided that the trustees were to form an opinion as to the employee’s ability or otherwise to work. The plaintiff sought payment of an ill-health pension under the Bank Pension Scheme.
Held: A pension scheme . .
CitedRe Hastings-Bass; Hastings v Inland Revenue CA 14-Mar-1974
Trustees of a settlement had exercised their power of advancement under the section, in order to save estate duty by transferring investments to be held on the trusts of a later settlement. However the actual effect of the advancement was that the . .

Cited by:
CitedSt Mary and St Michael Parish Advisory Company Ltd v The Westminster Roman Catholic Diocese Trustee, Her Majesty’s Attorney Genera and others ChD 6-Apr-2006
Parish members objected to the building within the church grounds of an education centre. They said that the land was to be used for the purposes of the members of the parish only under a trust deed of 1851.
Held: The deed had to be construed . .
CitedKohli v Lit and Others ChD 13-Nov-2009
The claimant asserted that the other shareholders had acted in a manner unfairly prejudicial to her within the company.
Held: The claimant was allowed to bring in without prejudice correspondence to contradict evidence by the defendant which . .
CitedPitt and Another v Holt and Others ChD 18-Jan-2010
The deceased had created a settlement in favour of his wife. He suffered serious injury and placed the damages in trust, but in a form which created an unnecessary liability to Inheritance Tax on his death. The wife’s mental health act receiver now . .
CitedFutter and Another v Futter and Others ChD 11-Mar-2010
Various family settlements had been created. The trustees wished to use the rule in Hastings-Bass to re-open decisions they had made after receiving incorrect advice.
Held: The deeds were set aside as void. The Rule in Hastings-Bass derives . .
CitedPitt and Another v Holt and Another ChD 18-Jan-2010
The claimant sought to unravel a settlement she had made as receiver for her late husband, saying that it had been made without consideration of its Inheritance Tax implications. The Revenue said that there was no operative mistake so as to allow . .
CitedFutter and Another v Revenue and Customs; Pitt v Same SC 9-May-2013
Application of Hastings-Bass Rule
F had created two settlements. Distributions were made, but overlooking the effect of section 2(4) of the 2002 Act, creating a large tax liability. P had taken advice on the investment of the proceeds of a damages claim and created a discretionary . .

Lists of cited by and citing cases may be incomplete.

Trusts, Capital Gains Tax

Updated: 01 November 2021; Ref: scu.227061

Robson v Mitchell (HM Inspector of Taxes): CA 18 May 2005

The company had taken out a loan to finance works on the farm. The loan was guaranted by the taxpayer. Years later when the farm was sold, part of the money was used to repay the loan, and the taxpayer sought to set it off against his liability for Capital Gains Tax.
Held: the taxpayer as guarantor was entitled to set the cost of the loan off against his tax only if he could show that it had been used entirely for the qualifying purpose of a business carried on by the company. In fact there had been no documentation to show how the money was used. The burden was on the taxpayer to establish entitlement. In the complete absence of any documentation, he had failed to satisfy that burden, and could not claim the relief.

Auld, Jonathan Parker, Neuberger LJJ
[2005] EWCA Civ 585
Bailii
Taxation of Chargeable Gains Act 1992 253(1)
England and Wales
Citing:
Appeal fromDavid Robson v Eric Mitchell (HM Inspector of Taxes) ChD 8-Jul-2004
The taxpayer sought capital gains tax relief of a loan to a business.
Held: To succeed in his claim the taxpayer had to establish that the indebtedness created was to be used entirely to serve the borrower’s business. . .
CitedStrong and Co of Romsey Ltd v Woodifield HL 30-Jul-1906
The company sought to deduct from its trading profits a sum expended paying damages for personal injuries to a visitor to the taxpayer’s Inn. The claim had been rejected.
Held: The company’s appeal failed. Lord Davey said: ‘I think that the . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Leading Case

Updated: 01 November 2021; Ref: scu.224945

Karim v Revenue and Customs: FTTTx 16 Dec 2009

FTTTx CGT – Section 9 TCGA – Chargeable if resident or ordinary resident – Was Appellant resident –
Held: yes. Section 9(3) – Relief if taxpayer only temporarily resident –
Held: not temporarily resident. Section 29 TMA: Was there neglect? Appeal dismissed

[2009] UKFTT 368 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 01 November 2021; Ref: scu.409153

Howard Schofield v HMRC: UTTC 27 Jul 2011

UTTC CAPITAL GAINS TAX – ALLOWABLE LOSS – Tax scheme involving options – the Options entered into were interlinked – no separate commercial existence – part of an indivisible process – planned as a single continuous operation – disputed loss construed against the whole transaction involving the four Options – no allowable loss – Appeal dismissed by Tax Chamber on substantive dispute – Appeal dismissed
CAPITAL GAINS TAX – OPTIONS OVER GILTS – whether exempt under s 115 TCGA

Warren J P
[2011] UKUT 306 (TCC), [2011] BTC 1800, [2011] STI 2775, [2011] STC 1920
Bailii
England and Wales

Capital Gains Tax

Updated: 01 November 2021; Ref: scu.448054

BNP Paribas And BNL v Commission: ECJ 21 Jun 2012

ECJ Appeals – State aid – Scheme for the realignment of the value of assets for tax purposes – Banking sector – Taxation of capital gains – Substitute tax – Selectivity

Cunha Rodrigues P
C-452/10, [2011] EUECJ C-452/10 – P
Bailii
European
Citing:
See AlsoBNP Paribas And BNL v Commission ECJ 3-Mar-2011
(Order) Intervention . .

Lists of cited by and citing cases may be incomplete.

European, Banking, Capital Gains Tax

Updated: 01 November 2021; Ref: scu.460889

Futter and Another v Futter and Others: ChD 11 Mar 2010

Various family settlements had been created. The trustees wished to use the rule in Hastings-Bass to re-open decisions they had made after receiving incorrect advice.
Held: The deeds were set aside as void. The Rule in Hastings-Bass derives from trust law, not the law of mistake. The principle does not exist to relieve advisors from the consequences of their mistakes. It exists to ensure that beneficiaries do not suffer by an invalid exercise of a power by trustees (no distinction being drawn between the objects in whose favour the power is exercised and those entitled in default). The relevant failure is a failure to take into account a particular factor and its impact upon the true effect of the exercise of the power. The actions here fell within the rule. In relation to private family trusts the consequence of invoking ‘the Rule in Hastings Bass’ is to make the deed or transaction void. The rigours of this analysis may be mitigated in particular cases.
Norris J pointed out: ‘This is another application by trustees who wish to assert that they have acted in an un-trustee-like fashion and so have failed properly to exercise a power vested in them. The trustees wish to take advantage of this failure to perform their duties in order to enable the beneficiaries to avoid paying the tax liability consequent upon the trustees’ decision. Put like that (and I am conscious that that is not the only way in which the situation may be described) the possibility is raised that the development of the rule may have been diverted from its true course.’

Norris J
[2010] EWHC 449 (Ch), [2010] Pens LR 145, [2010] STC 982, [2010] STI 1442, [2010] BTC 455, [2010] WTLR 609
Bailii
Taxation of Capital Gains Act 1992 87(2)
England and Wales
Citing:
CitedBurrell and Sharman v Burrell, Shore, Tyrrell, etc ChD 23-Feb-2005
burrell_burrellChD05
Shares were appointed by trustees in the mistaken belief that they attracted business property relief from Inheritance tax. They sought to set aside the appointment.
Held: Mann J applied the rule in Stannard v Fisons Pensions Trust and . .
CitedGreen v Cobham ChD 19-Jan-2000
cw The Trustees had overlooked the fact that a Will Trust and two sub-settlements together constituted a single composite settlement for the purposes of CGT with a single body of trustees. As a result of his . .
CitedPitt and Another v Holt and Another ChD 18-Jan-2010
The claimant sought to unravel a settlement she had made as receiver for her late husband, saying that it had been made without consideration of its Inheritance Tax implications. The Revenue said that there was no operative mistake so as to allow . .
CitedBreadner v Granville-Grossman ChD 2000
‘it cannot be right, whenever trustees do something which they later regret and think they ought not to have done, they can say they never did it in the first place’
It was not correct to suggest that whenever trustees do something which they . .
CitedSmithson and others v Hamilton CA 23-Jul-2008
. .
CitedSieff v Fox ChD 23-Jun-2005
The advisers to trustees wrongly advised the trustees about the tax consequences of exercising a power of appointment in a certain way. As a result a large unforeseen Capital Gains Tax liability arose. The trustees sought to set aside the . .
CitedColchester Estates (Cardiff) v Carlton Industries plc ChD 30-Mar-1984
If a decision of a court has been reached after full consideration of an earlier decision which went the other way, it should not be open to review on a third occasion when the same point arose for decision.
Nourse J said: ‘There must come a . .
CitedRe Hastings-Bass; Hastings v Inland Revenue CA 14-Mar-1974
Trustees of a settlement had exercised their power of advancement under the section, in order to save estate duty by transferring investments to be held on the trusts of a later settlement. However the actual effect of the advancement was that the . .
CitedPitt and Another v Holt and Others ChD 18-Jan-2010
The deceased had created a settlement in favour of his wife. He suffered serious injury and placed the damages in trust, but in a form which created an unnecessary liability to Inheritance Tax on his death. The wife’s mental health act receiver now . .
CitedStannard v Fisons Pension Trust Limited CA 1991
Fisons had sold their fertiliser division to Norsk Hydro. Acting on advice of actuaries and thinking that the fund was in deficit, the trustees made a transfer to a new fund to provide for pensions of transferring employees in accordance with a . .
CitedGibbon v Mitchell ChD 1990
G executed a deed surrendering his life interest in a trust fund in order to vest the property in his two children: the deed did not have that effect because of two errors (one of which was ignoring the fact that his life interest was subject to . .
CitedAnker-Petersen v Christensen ChD 2002
Where a mistake is made as to the effect of an appointment under a trust it may be possible to invoke the court’s jurisdiction to rescind the appointment. Davis J considered Millett J’s distinction between ‘effect’ and ‘consequences’: ‘An example in . .
CitedAbacus Trust Company (Isle of Man) Ltd and Another v National Society for the Prevention of Cruelty to Children ChD 17-Jul-2001
abacus_nspccChD01
The claimants were beneficiaries, trustee and protector of a trust fund. In order to mitigate Capital Gains Tax liability they sought advice, and, following that advice, entered into a deed of gift in favour of the respondent charity. The deed . .
CitedIn Re Marsden’s Trust 4-Jun-1859
Where the donee exercises a power of appointment in favour of one of several objects of the power, with a view to the benefit of a stranger, the appointment is fraudulent and void, even although the appointee is ignorant of the fraud, and the motive . .
CitedCloutte v Storey 1911
A trust power was exercised in favour of one of the objects, but under a private arrangement whereby he passed the benefit back to his parents, who had made the appointment.
Held: Farwell LJ spoke of a compromise of proceedings sanctioned by a . .
CitedOgden and Another v Trustees of the RHS Griffiths 2003 Settlement and others; In Re Griffiths deceased ChD 25-Jan-2008
A life-time transfer which had been made under a mistake as to the donor’s chances of surviving long enough for the transfer to be exempt from Inheritance Tax was set aside. Unbeknown to the donor, he had lung cancer at the time.
Held: Lewison . .
CitedVatcher v Pault PC 17-Dec-2014
(Jersey) A fraudulent exercise of a trust power is constituted if it is exercised for a purpose or with an intention beyond the scope of the power. It was said that ‘it is not enough that an appointor or some person not an object of power may . .
CitedSmithson and others v Hamilton ChD 10-Dec-2007
It is settled law that ‘the Hastings-Bass principle’ was not restricted to cases where the trustees failed to achieve the direct legal effect which they intended. The usual situation is that the action which the trustees have taken achieves exactly . .
CitedTurner v Turner ChD 1983
The trustees for many years signed every document placed before them by their solicitors (including appointments) without understanding that they had any discretion in the exercise.
Held: What might first appear to have been a decision of . .
CitedThe Duke Of Portland And Others v Lady Mary E Topham And Others HL 6-Apr-1864
A power, to be validly executed, must be executed without any indirect object. The donee of the power must give the property which is the subject of it, as property, to the person to whom he affects to give it.
A created a power to appoint a . .
CitedMettoy Pension Trustees v Evans ChD 1990
Where a trustee acts under a discretion given to him by the terms of the trust the court will interfere with his action if it is clear that he would not have so acted as he did had he not failed to take into account considerations which he ought to . .
CitedAMP (UK) Plc and Another v Barker and Others ChD 8-Dec-2000
The claimants were interested under a pension scheme. Alterations had been made, which the said had been in error, and they sought rectification to remove a link between early leaver benefits and incapacity benefits. The defendant trustees agreed . .

Cited by:
At First InstanceFutter and Another v Revenue and Customs; Pitt v Same SC 9-May-2013
Application of Hastings-Bass Rule
F had created two settlements. Distributions were made, but overlooking the effect of section 2(4) of the 2002 Act, creating a large tax liability. P had taken advice on the investment of the proceeds of a damages claim and created a discretionary . .

Lists of cited by and citing cases may be incomplete.

Trusts, Capital Gains Tax

Updated: 01 November 2021; Ref: scu.402600

Lord Howard of Henderskelfe (Deceased) v Revenue and Customs: UTTC 11 Mar 2013

UTTC Taxation of Chargeable Gains Act 1992, sections 44 and 45 – whether a valuable painting displayed in Castle Howard was ‘plant’ within section 44(1)(c) of the 1992 Act – whether the painting satisfied the test as to function – whether the painting satisfied the test as to permanence – whether the painting was not plant in the hands of the owner who disposed of it when the business in which the painting was used was not that of the owner of the painting but of a company, Castle Howard Estate Ltd – whether painting a ‘wasting asset’ within section 44 of the 1992 Act – whether owner of painting entitled to exemption from capital gains tax pursuant to section 45(1) of the 1992 Act

[2013] UKUT 129 (TCC)
Bailii
Taxation of Chargeable Gains Act 1992 44 45
England and Wales

Capital Gains Tax

Updated: 01 November 2021; Ref: scu.509181

Green v Cobham: ChD 19 Jan 2000

cw The Trustees had overlooked the fact that a Will Trust and two sub-settlements together constituted a single composite settlement for the purposes of CGT with a single body of trustees. As a result of his retirement from practice the solicitor to a non-resident will trust was no longer treated as non-resident for capital gains tax purposes, with the result that there was no longer a majority of non-resident trustees and the will trust became a United Kingdom resident trust.
Held: The deed of appointment was set aside. The exercise of the power of appointment, by trustees failing to take any account of the potentially adverse capital gains tax consequences, was invalid.

Jonathan Parker J
(2002) STC 820, [2000] EWHC 1564 (Ch), (2001-02) 4 ITELR 785, [2000] WTLR 1101, [2002] STC 820, [2002] STI 879, [2002] BTC 170
Bailii
England and Wales
Cited by:
appliedAbacus Trust Company (Isle of Man) Ltd and Another v National Society for the Prevention of Cruelty to Children ChD 17-Jul-2001
abacus_nspccChD01
The claimants were beneficiaries, trustee and protector of a trust fund. In order to mitigate Capital Gains Tax liability they sought advice, and, following that advice, entered into a deed of gift in favour of the respondent charity. The deed . .
CitedAMP (UK) Plc and Another v Barker and Others ChD 8-Dec-2000
The claimants were interested under a pension scheme. Alterations had been made, which the said had been in error, and they sought rectification to remove a link between early leaver benefits and incapacity benefits. The defendant trustees agreed . .
CitedFutter and Another v Futter and Others ChD 11-Mar-2010
Various family settlements had been created. The trustees wished to use the rule in Hastings-Bass to re-open decisions they had made after receiving incorrect advice.
Held: The deeds were set aside as void. The Rule in Hastings-Bass derives . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax, Equity

Updated: 01 November 2021; Ref: scu.182188

Trennery v West (Inspector of Taxes): HL 27 Jan 2005

The House considered the application of the section to ‘flip-flop trusts’. The section allocated liability to charge on gains within a settlement under certain circumstances onto the settlor, and at his rate of tax. Assets were allocated to two trusts, which in alternating years realised gains and allowed a benefit to be taken.
Held: The Section caught the extraction of value in any form for the benefit of the settlor or his spouse without introducing an undesirable degree of overkill. A chargeable gain had accrued to the Trustees on the share sale, and the settlor had divested himself of all interest in the property at the relevant time. The revenue contended that he was to be regarded as having a benefit derived form the assets, even though in the alternate trust. Under trust law the second settlement served as a vehicle to receive and continue the act of bounty effected by the first settlement, with the rule against perpetuities acting as ‘a sort of umbilical cord’ between the two. The taxpayer had failed to establish that the proceeds when taken were not derived from the assets in the linked trusts, and the gains were to be taxed at his, higher rate of tax.

Lord Steyn Lord Hoffmann Lord Millett Lord Rodger of Earlsferry Lord Walker of Gestingthorpe
[2005] UKHL 5, Times 01-Feb-2005, [2005] 1 All ER 827
Bailii, House of Lords
Taxation of Chargeable Gains Act 1992 77(1)
England and Wales
Citing:
CitedRoome v Edwards HL 5-Feb-1981
HL Capital gains tax – Trustees of fund appointed out of main settlement under special powers- – Whether liable for chargeable gain accruing to trustees of unappointed residue – Finance Act 1965, s 25(11) – Sch . .
Appeal fromTrennery v West (HM Inspector of Taxes) and Related Appeals CA 18-Dec-2003
. .
CitedIn Re Pilkington’s Will Trusts; Pilkington v Inland Revenue Commissioners HL 8-Oct-1962
The trustees proposed establishing a new trust in respect of the share of an estate to which an infant beneficiary had a contingent entitlement. A portion of the trust fund would be allocated to the new trust.
Held: This was a lawful exercise . .
CitedCraven v White HL 1988
The inland revenue claimed that several transactions had been arranged for the predominant purpose of obtaining a tax advantage, and that accordingly they should be disregarded. Lord Oliver: ‘[T]he transactions which, in each appeal, the Inland . .
CitedCommissioners of Inland Revenue v McGuckian HL 21-May-1997
Steps which had been inserted into a commercial transaction, but which had no purpose other than the saving of tax are to be disregarded when assessing the tax effect of the scheme. The modern approach to statutory construction is to have regard to . .
CitedInland Revenue Commissioners v Duke of Westminster HL 7-May-1935
The Duke’s gardener was paid weekly, but to reduce tax, his solicitors drew up a deed in which it was said that the earnings were not really wages, but were an annual payment payable by weekly instalments.
Held: To find out what the true . .
CitedLeedale (Inspector of Taxes) v Lewis HL 14-Oct-1982
The statute called for the apportionment of capital gains made by non-resident trustees where resident beneficiaries had ‘interests’ in the settled property, with the apportionment to be made ‘in such manner as is just and reasonable between’ them. . .
At first instanceWest and Others (HM Inspector of Taxes) v Trennery and others ChD 1-Apr-2003
The taxpayers had adopted the ‘flip-flop’ scheme to reduce their Capital Gains Tax liability.
Held: The section was intended to prevent relief where the settlor retained some direct or indirect benefit. Derived property was defined to include . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Leading Case

Updated: 01 November 2021; Ref: scu.222053

Blum v Revenue and Customs: UTLC 23 Jul 2013

UTLC TAX – Capital Gains Tax – freehold office premises – value as at 31 March 1982 – rental values – value relativities between floors – yield – comparables – value determined at pounds 137,500 – Taxation of Chargeable Gains Act 1992

P R Francis FRICS
[2013] UKUT 0304 (LC)
Bailii
Taxation of Chargeable Gains Act 1992
England and Wales

Capital Gains Tax

Updated: 01 November 2021; Ref: scu.514721

Watson v Revenue and Customs: FTTTx 17 Jun 2014

FTTTx CAPITAL GAINS TAX – husband and wife – dissolution of partnership – whether appellant retained a beneficial interest in partnership land following dissolution – subsequent disposal of the land – whether gain properly assessed on the appellant – appeal allowed

Jonathan Cannan J
[2014] UKFTT 613 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 01 November 2021; Ref: scu.533715

Revenue and Customs v Smallwood and Another: CA 8 Jul 2010

The taxpayers had set up trusts which they said were based in Mauritius allowing them to claim double taxation relief. The Revenue had issued closure notices, confirmed by the SPCT, but overturned by the High Court. The Revenue appealed, saying that the trust was resident in the UK.
Held: The appeal suceeded (Patten LJ dissenting in part). The judge had erred in applying the test of residence only as at the date of the disposal in issue. The phrase ‘resident in a contracting state’ should be read as ‘chargeable to to tax in that state on account of residence’ which would allow consideration also of subsequent actions and events. The relevant place of effective management was that of the trustees as a contuing body, and on the facts the SPCT had been entitled to conclude that it was in the UK.

Ward, Hughes, Patten LJJ
[2010] EWCA Civ 778, [2010] WLR (D) 177, [2010] STI 2174, 12 ITL Rep 1002, [2010] BTC 637, [2010] STC 2045, (2010) 80 TC 536
Bailii, WLRD
Taxation of Chargeable Gains Act 1992 277, Double Taxation Relief (Taxes on Income) (Mauritius) Order 1981 (SI 1121/1981) Sch 1 4(1)(3) 13(4)
England and Wales
Citing:
At SPCTTrevor Smallwood Trust v Revenue and Customs SCIT 19-Feb-2008
SCIT CAPITAL GAINS TAX – double taxation relief – trust assets included shares which would realise a gain on disposal – UK settlor had power to appoint new trustees – tax planning scheme – new trustees in . .
Appeal fromSmallwood v Revenue and Customs ChD 8-Apr-2009
The taxpayer had settled company shares for the benefit of himself and his family. He appealed from an amendment to his tax returns creating a CGT liability of 6 million pounds.
Held: The appeal was successful. . .
CitedEdwards (Inspector of Taxes) v Bairstow HL 25-Jul-1955
The House was asked whether a particular transaction was ‘an adventure in the nature of trade’.
Held: Although the House accepted that this was ‘an inference of fact’, on the primary facts as found by the Commissioners ‘the true and only . .
CitedDe Beers Consolidated Mines Ltd v Howe, Surveyor of Taxes HL 1905
The appellant Company was registered in the Cape Colony and it’s business was mining for diamonds in mines which it possessed in South Africa, and selling the diamonds there under annual contracts to a syndicate for delivery there. The Head Office . .
CitedJames Buchanan and Co Ltd v Babco Forwarding and Shipping (UK) Ltd HL 1978
A consignment of whisky was stolen whilst on consignemt from a bonded warehouse under CMR terms for Teheran. In bond, it was worth 7,000 pounds, and on export no excise duty was to be paid. Being stolen in the course of transit, excise duty of . .
CitedWood and Another v Holden (HMIT) CA 26-Jan-2006
Husband and wife sold their business, arranging matters so as to avoid paying Capital Gains Tax by transferring their interest between members of a group of companies which was non-resident.
Held: The scheme was effective. The sole real issue . .
CitedWensleydale’s Settlement Trustees v Inland Revenue Commissioners SCIT 1996
The test for where a trust has its tax residence is the place which is the centre of top-level management. . .
CitedInland Revenue Commissioners v Commerzbank AG ChD 1990
Mummery J set out the correct approach to interpretation of double taxation agreements as laid down in Fothergill. He said ‘(1) It is necessary to look first for a clear meaning of the words used in the relevant article of the convention, bearing in . .
CitedFothergill v Monarch Airlines Ltd HL 10-Jul-1980
The plaintiff, on arriving at the airport found that his luggage had been lost. The defendant denied liability saying he had not notified his claim within the requisite period.
Held: Elementary justice requires that the rules by which the . .

Cited by:
CitedFowler v Revenue and Customs SC 20-May-2020
The taxpayer, a diver resident in South Africa had undertaken engagements within UK waters and now disputed his liability to Income Tax using a deeming provision in section 5 of the 2005 Act being self employed.
Held: HMRC’s appeal succeeded. . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax, Taxes Management

Updated: 31 October 2021; Ref: scu.420403

Fraser v Revenue and Customs: SCIT 30 Mar 2006

fraserSCIT2006

SCIT CAPITAL GAINS TAX – Retirement relief – Section 163 and Schedule 6 TCGA 1992 – Whether in the redetermination of the qualifying period directed by paragraph 14(1) of Schedule 6 the relevant conditions laid down by section 163(5)(b) must be satisfied throughout the putative extended qualifying period – held they must be- appeal dismissed.

[2006] UKSPC SPC00530
Bailii

Capital Gains Tax

Updated: 31 October 2021; Ref: scu.240290

Sanderson v HM Revenue and Customs: UTTC 6 Dec 2013

UTTC CAPITAL GAINS TAX – validity of a ‘discovery’ assessment under section 29(1) of the Taxes Management Act 1970 – whether a ‘discovery’ – whether conditions of section 29(4) and (5) of the Act satisfied

Newey J
[2013] UKUT 623 (TCC), [2014] STC 915, [2014] STI 433, [2014] BTC 502
Bailii
Taxes Management Act 1970
England and Wales

Capital Gains Tax, Taxes Management

Updated: 31 October 2021; Ref: scu.521029

Revenue and Customs v Alan Blackburn Sports Ltd and Another: CA 18 Dec 2008

The commissioners appealed against a decision granting the respondents tax relief under the Enterprise Investment Scheme.
Held: The Revenue’s appeal succeeded. Shares could only qualify for a relief by way of a deferral of CGT under the Enterprise Investment Scheme where they had been issued only after an appropriate company resolution.

Lord Neuberger of Abbotsbury
[2008] EWCA Civ 1454, Times 02-Jan-2009
Bailii
Taxation of Chargeable Gains Act 1992 5B
England and Wales

Capital Gains Tax

Updated: 31 October 2021; Ref: scu.278950

HMRC v Charlton Corfield and Corfield: UTTC 20 Dec 2012

UTTC Capital Gains Tax – whether discovery assessments valid – s 29, Taxes Management Act 1970 – meaning of ‘discovery’ – inference of information under s 29(6)(d)(i) – inclusion of DOTAS scheme reference number in return – whether an officer could not have been reasonably expected to be aware of an insufficiency of tax (s 29(5)) – nature of the hypothetical officer

[2012] UKUT 770 (TCC), [2013] STC 866, [2013] BTC 1634, [2013] STI 259
Bailii
Taxes Management Act 1970 29
England and Wales

Capital Gains Tax, Taxes Management

Updated: 31 October 2021; Ref: scu.468861

Blumenthal v Revenue and Customs: FTTTx 8 Aug 2012

CAPITAL GAINS TAX- tax avoidance scheme – whether Appellant’s loan notes were converted to qualifying corporate bonds for the purposes of sections 116 and 117 TCGA 1992 – whether steps taken to reduce the market value of loan notes effective for capital gains tax purposes – purposive construction and the application of the Ramsay principle – error in drafting amendments to loan notes – principles of contractual interpretation – whether HMRC entitled to raise a discovery assessment under section 29 TMA 1970 – whether the officer could reasonably be expected to be aware of the insufficiency – appeal dismissed
[2012] UKFTT 499 (TC), [2012] STI 3236, [2012] SFTD 1264
Bailii
England and Wales

Updated: 27 October 2021; Ref: scu.466071

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 can be a chargeable event for foreign settlements. Though the House allowed the appeal, it approved the CA’s approach to the interpretation of deeming provisions.
Lord Browne-Wilkinson summarised the law: ‘In English law the rights of a testamentary legatee in the unadministered estate of a testator are well settled: see Lord Sudeley v. Attorney-General [1897] AC 11 and Commissioner of Stamp Duties (Queensland) v. Livingston [1965] AC 694 . . A legatee’s right is to have the estate duly administered by the personal representatives in accordance with law. But during the period of administration the legatee has no legal or equitable interest in the assets comprised in the estate.’
. . And ‘it is crucial to appreciate that the property settled by [the legatee] comprised, not the assets in the deceased’s estate . . but a separate chose in action, the right to due administration of his estate.’
HL Capital gains tax – Settlements – Deceased not resident in United Kingdom – Share of residuary estate accruing to his UK resident daughter – Trust effected by instrument of variation within 2 years of death – Trustee not resident in the United Kingdom – Capital payments made to daughter by trustee – Whether gains chargeable as daughter was settlor, or not chargeable as deceased was settlor – Finance Act 1965, .v.v 24(7), 24(11) and 42, Finance Act 1981, ss 80 – 85.
Lord Browne-Wilkinson
Times 05-Jul-1994, Gazette 03-Aug-1994, Ind Summary 18-Jul-1994, [1994] STC 148, [1995] 1 AC 148, [1994] UKHL TC – 67 – 56
Bailii
Finance Act 1981 80, Finance Act 1965 24(11), Taxation of Chargeable Gains Act 1992 62(6)
England and Wales
Citing:
Appeal fromMarshall (Inspector of Taxes) v Kerr CA 7-Apr-1993
A variation of trusts in Jersey will be deemed to have been made by the deceased – no Capital Gains Tax arising. Interpretation of deeming Provisions. The taxpayer was not a settlor in an overseas trust. Deeming provisions should not generally be . .
CitedSudeley v Attorney-General HL 1897
The husband had died leaving part of his residuary estate to his widow. She then died before the estate was fully administered. Both died domiciled in England. The husband’s estate included mortgages of land in New Zealand and the House was asked . .
CitedCommissioner of Stamp Duties (Queensland) v Livingston PC 7-Oct-1964
A testator had died domiciled in New South Wales and with real and personal property both in New South Wales and in Queensland. He left one-third of his real and personal estate to his widow absolutely. She then died intestate, also domiciled in New . .

Cited by:
CitedJerome 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 . .
CitedJenks v Dickinson (Inspector of Taxes) ChD 16-Jun-1997
Legislation which created a clear anomaly can be interpreted so as to avoid the anomaly if the words used are sufficiently ambiguous as to allow an alternative construction.
Neuberger J discussed the case of Marshall v Kerr, saying: ‘It appears . .
CitedRevenue and Customs v DCC Holdings (UK) Ltd SC 15-Dec-2010
The taxpayer had entered into a ‘repo’ loan to its bank, agreeing to purchase a block of gilt edged securities, and to resell them at a later date at a fixed figure. The profit and figures included an allowance for the interest payments to be made. . .
CitedRaymond Saul and Co (A Firm) v Holden and Another; In re Hemming (deceased) ChD 12-Nov-2008
The claimant was sole residuary legatee of his mother’s estate. He became bankrupt, but was released by automatic discharge from the bankruptcy before the administration of the estate was completed. He challenged the solicitors who wished to pay the . .
CitedFowler v Revenue and Customs SC 20-May-2020
The taxpayer, a diver resident in South Africa had undertaken engagements within UK waters and now disputed his liability to Income Tax using a deeming provision in section 5 of the 2005 Act being self employed.
Held: HMRC’s appeal succeeded. . .

Lists of cited by and citing cases may be incomplete.
Updated: 23 October 2021; Ref: scu.83428

Marshall (Inspector of Taxes) v Kerr: CA 7 Apr 1993

A variation of trusts in Jersey will be deemed to have been made by the deceased – no Capital Gains Tax arising. Interpretation of deeming Provisions. The taxpayer was not a settlor in an overseas trust. Deeming provisions should not generally be read to produce an unjust or absurd result.
Peter Gibson LJ said: ‘I take the correct approach in construing a deeming provision to be to give the words used their ordinary and natural meaning, consistent so far as possible with the policy of the Act and the purposes of the provisions so far as such policy and purposes can be ascertained; but if such construction would lead to injustice or absurdity, the application of the statutory fiction should be limited to the extent needed to avoid such injustice or absurdity, unless such application would clearly be within the purposes of the fiction. I further bear in mind that, because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so.’
Peter Gibson LJ, Lord Browne-Wilkinson
Gazette 07-Apr-1993, Ind Summary 26-Apr-1993, [1993] STC 360, (1993) 67 TC 56
Finance Act 1965 24(7) 24(11), Taxation of Chargeable Gains Act 1992 62(4) 62(6)
England and Wales
Citing:
Appeal fromMarshall (Inspector of Taxes) v Kerr ChD 22-Jan-1992
A payment made from an estate which had been settled overseas by means of a deed of variation was deemed to have been a payment by the settlor, and taxable as such. In interpreting a deeming provision, the court musty consider carefully as between . .

Cited by:
Appeal fromMarshall (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 . .
CitedJenks v Dickinson (Inspector of Taxes) ChD 16-Jun-1997
Legislation which created a clear anomaly can be interpreted so as to avoid the anomaly if the words used are sufficiently ambiguous as to allow an alternative construction.
Neuberger J discussed the case of Marshall v Kerr, saying: ‘It appears . .
CitedRevenue and Customs v DCC Holdings (UK) Ltd SC 15-Dec-2010
The taxpayer had entered into a ‘repo’ loan to its bank, agreeing to purchase a block of gilt edged securities, and to resell them at a later date at a fixed figure. The profit and figures included an allowance for the interest payments to be made. . .

Lists of cited by and citing cases may be incomplete.
Updated: 23 October 2021; Ref: scu.83430

Jenks v Dickinson (Inspector of Taxes): ChD 16 Jun 1997

Legislation which created a clear anomaly can be interpreted so as to avoid the anomaly if the words used are sufficiently ambiguous as to allow an alternative construction.
Neuberger J discussed the case of Marshall v Kerr, saying: ‘It appears to me that the observations of Peter Gibson J, approved by Lord Browne-Wilkinson, in Marshall indicate that, when considering the extent to which one can ‘do some violence to the words’ and whether one can ‘discard the ordinary meaning’, one can, indeed one should, take into account the fact that one is construing a deeming provision. This is not to say that normal principles of construction somehow cease to apply when one is concerned with interpreting a deeming provision; there is no basis in principle or authority for such a proposition. It is more that, by its very nature, a deeming provision involves artificial assumptions. It will frequently be difficult or unrealistic to expect the legislature to be able satisfactorily to [prescribe] the precise limit to the circumstances in which, or the extent to which, the artificial assumptions are to be made.’
Neuberger J
Times 16-Jun-1997, [1997] STC 853
Finance Act 1989 138(1)
England and Wales
Citing:
CitedMarshall (Inspector of Taxes) v Kerr CA 7-Apr-1993
A variation of trusts in Jersey will be deemed to have been made by the deceased – no Capital Gains Tax arising. Interpretation of deeming Provisions. The taxpayer was not a settlor in an overseas trust. Deeming provisions should not generally be . .
CitedMarshall (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 by:
CitedHarding v Revenue and Customs CA 23-Oct-2008
Lapsed Currency conversion option lost status
The taxpayer appealed his assessment to Capital Gains Tax on his redemption of loan notes arising following the sale of his computer company. He said that they were qualifying corporate bonds. The question was whether a security in which a currency . .
CitedRevenue and Customs v DCC Holdings (UK) Ltd SC 15-Dec-2010
The taxpayer had entered into a ‘repo’ loan to its bank, agreeing to purchase a block of gilt edged securities, and to resell them at a later date at a fixed figure. The profit and figures included an allowance for the interest payments to be made. . .

Lists of cited by and citing cases may be incomplete.
Updated: 16 October 2021; Ref: scu.82512

Trevor Smallwood Trust v Revenue and Customs: SCIT 19 Feb 2008

SCIT CAPITAL GAINS TAX – double taxation relief – trust assets included shares which would realise a gain on disposal – UK settlor had power to appoint new trustees – tax planning scheme – new trustees in Mauritius appointed after which shares sold after which UK trustees appointed – all events took place in same tax year – whether trustees entitled to double taxation relief – whether trustees resident only in Mauritius – no – or also resident in the UK – yes – whether place of effective management of trust was Mauritius – no – or UK – yes – appeal dismissed – TCGA 1992 S 77(7); Double Taxation Relief (Taxes on Income) (Mauritius) Order 1981 SI 1981 No 1121.
[2008] UKSPC SPC00669
Bailii
England and Wales
Cited by:
At SPCTSmallwood v Revenue and Customs ChD 8-Apr-2009
The taxpayer had settled company shares for the benefit of himself and his family. He appealed from an amendment to his tax returns creating a CGT liability of 6 million pounds.
Held: The appeal was successful. . .
At SPCTRevenue and Customs v Smallwood and Another CA 8-Jul-2010
The taxpayers had set up trusts which they said were based in Mauritius allowing them to claim double taxation relief. The Revenue had issued closure notices, confirmed by the SPCT, but overturned by the High Court. The Revenue appealed, saying that . .

Lists of cited by and citing cases may be incomplete.
Updated: 15 October 2021; Ref: scu.267755

Smallwood v Revenue and Customs: ChD 8 Apr 2009

The taxpayer had settled company shares for the benefit of himself and his family. He appealed from an amendment to his tax returns creating a CGT liability of 6 million pounds.
Held: The appeal was successful.
Mann J
[2009] EWHC 777 (Ch), [2009] STI 1092, [2009] WTLR 669, [2009] BTC 135, [2009] STC 1222, 11 ITL Rep 943
Bailii
Taxation of Capital Gains Act 1992 86, Double Taxation Relief (Taxes on Income)(Mauritius) Order 1981
England and Wales
Citing:
At SPCTTrevor Smallwood Trust v Revenue and Customs SCIT 19-Feb-2008
SCIT CAPITAL GAINS TAX – double taxation relief – trust assets included shares which would realise a gain on disposal – UK settlor had power to appoint new trustees – tax planning scheme – new trustees in . .
CitedJames Buchanan and Co Ltd v Babco Forwarding and Shipping (UK) Ltd HL 1978
A consignment of whisky was stolen whilst on consignemt from a bonded warehouse under CMR terms for Teheran. In bond, it was worth 7,000 pounds, and on export no excise duty was to be paid. Being stolen in the course of transit, excise duty of . .

Cited by:
Appeal fromRevenue and Customs v Smallwood and Another CA 8-Jul-2010
The taxpayers had set up trusts which they said were based in Mauritius allowing them to claim double taxation relief. The Revenue had issued closure notices, confirmed by the SPCT, but overturned by the High Court. The Revenue appealed, saying that . .
At ChDFowler v Revenue and Customs SC 20-May-2020
The taxpayer, a diver resident in South Africa had undertaken engagements within UK waters and now disputed his liability to Income Tax using a deeming provision in section 5 of the 2005 Act being self employed.
Held: HMRC’s appeal succeeded. . .

Lists of cited by and citing cases may be incomplete.
Updated: 15 October 2021; Ref: scu.331156

White and Another v Revenue and Customs (Capital Gains Tax – Principle Private Residence Relief): FTTTx 30 Oct 2019

CAPITAL GAINS TAX – principle private residence relief – HMRC decision that extra-statutory concession D49 should not apply – whether or not FTT has jurisdiction to consider application of ESC D49 – held not – appeal struck out
[2019] UKFTT 659 (TC)
Bailii
England and Wales

Updated: 15 October 2021; Ref: scu.644056

Wagstaff and Another v Revenue and Customs: FTTTx 7 Jan 2014

CAPITAL GAINS TAX – Flat originally owned by taxpayers’ mother/mother-in-law – Flat sold to taxpayers subject to agreement permitting mother/mother-in-law to remain in occupation for her life or until remarriage – Flat later sold after mother/mother-in-law ceased to occupy and more suitable property provided – whether private residence relief available – whether taxpayers trustees and flat ‘settled property’ – appeal allowed
[2014] UKFTT 43 (TC)
Bailii
England and Wales

Updated: 12 October 2021; Ref: scu.521759

Goldsmith v Revenue and Customs: FTTTx 15 Aug 2012

FTTTx INCOME TAX – loss relief for loans to traders – s253 Taxation of Chargeable Gains Act 1992 (‘TCGA 1992’) – whether payments made by appellant in respect of interest on bank loans to property trading company which appellant had guaranteed were ‘made under the guarantee’ for the purposes of s253(4) TCGA 1992 – no- relevance of demand under guarantee considered – whether relief for outstanding amount of principal on irrecoverable loan available under s253(3) TCGA 1992 – yes – whether loss could be relieved under appellant’s general income under s574 ICTA 1988 – no -relevance of HMRC treatment of similar claims considered – whether Tribunal had ‘equitable jurisdiction’ to deal with appellant’s affairs in the round – no -appeal against refusal of loss relief claim under 253(3) TCGA 1992 allowed -appeal against refusal to allow relief to be set against general income dismissed – appeal allowed in part
Swami Raghavan
[2012] UKFTT 521 (TC)
Bailii
Taxation of Chargeable Gains Act 1992 253
England and Wales

Updated: 12 October 2021; Ref: scu.466100

Burton and Others v Revenue and Customs: FTTTx 16 Jul 2009

FTTTx CAPITAL GAINS TAX – ss 86, 87, 90, 97 and Schedule 5 TCGA -‘Flip Flop’- whether taxpayer still interested within s.86(1)(d) in first settlement from which he was excluded because money borrowed by first settlement settled on second settlement? No – Whether taxpayer regarded as receiving capital payment within s.87(4) when money transferred to second settlement? Yes – Whether outright payment of money within s.97(4)? Yes – Appeal allowed in part.
[2009] UKFTT 203 (TC)
Bailii
Taxation of Chargeable Gains Act 1992 86
England and Wales

Updated: 12 October 2021; Ref: scu.409001

Marks v Revenue and Customs: FTTTx 1 Apr 2011

SHARE VALUATION – 1982 valuation – two companies carrying on a related business owned by the same person – whether valued separately or together – separately – whether on the valuation of one company the owner of the other is in the market – yes but with his knowledge limited to what a prudent prospective purchaser would reasonably require – the valuation of each company to assume the continued trading, management and finance provided by the other – our valuation andpound;4.152m for both companies compared to the experts’ valuations of andpound;8.425m for the Appellant and andpound;3.1m for HMRC
[2011] UKFTT 221 (TC)
Bailii
England and Wales

Updated: 08 October 2021; Ref: scu.442993

Purves (Inspector of Taxes) v Harrison: ChD 23 Nov 2000

In order to claim relief against Capital Gains tax on the disposal of business assets on retirement, the assets could be disposed of separately, but some connection must be shown to establish that they formed part of the same transaction overall. A businessman disposed of different parts of his business to different people, but in reality there was no effective same transaction. The business had been structured to allow disposals of different parts of it, and the fact that they were almost at the same time was mere co-incidence.
Gazette 30-Nov-2000, Times 23-Nov-2000
Taxation of Chargeable Gains Act 1992 69
England and Wales

Updated: 01 October 2021; Ref: scu.85084

Pickles v Revenue and Customs (Whether Crediting A Directors’ Loan Account Which Was Freely Available for The Directors/Members To Draw Upon): FTTTx 22 Apr 2020

Whether crediting a directors’ loan account which was freely available for the directors/members to draw upon constituted a distribution for the purposes of s.1020 of the CTA 2010.
Held: No. Valuation of goodwill for purposes of section 272 (1) of the TCGA 1992. Findlay’s Trustees v Inland Revenue Commissioners [1938] SVC applied. Experts: whether an expert can act as an advocate in the proceedings?
Held: no.
[2020] UKFTT 195 (TC)
Bailii
England and Wales

Updated: 05 September 2021; Ref: scu.651584

Taylor Clark International Ltd v Lewis (Inspector of Taxes): ChD 24 Mar 1997

Currency fluctuation losses arising from a loan to a subsidiary overseas company were not allowable against capital gains tax. The words ‘the debt on a security’ in section 117(1)can refer to an obligation to pay or repay embodied in the Loan Note, which is evidence of the right to receive payment.
Times 24-Mar-1997, [1997] STC 499
Capital Gains Tax Act 1979 117 134
England and Wales
Cited by:
Appeal fromTaylor Clark International Limited v Lewis (HM Inspector of Taxes) CA 18-Nov-1998
Security exchange losses on interest-bearing loan were not to be set off against capital gains as being a debt on a security even though secured. Being simply secured itself was insufficient to make a debt a debt on a security. . .
CitedHarding v Revenue and Customs CA 23-Oct-2008
Lapsed Currency conversion option lost status
The taxpayer appealed his assessment to Capital Gains Tax on his redemption of loan notes arising following the sale of his computer company. He said that they were qualifying corporate bonds. The question was whether a security in which a currency . .

Lists of cited by and citing cases may be incomplete.
Updated: 30 July 2021; Ref: scu.89737

Revenue and Customs v Smallwood: ChD 6 Jul 2006

The Revenue appealed dismissal of its claim for assessment to tax of distributions received from taxpayers units in an enterprise zone property.
Held: The appeal failed. Legislation had since prevented 100% capital allowance claims.
Warren J
[2006] EWHC 1653 (Ch), Times 23-Aug-2006
Bailii
Taxation of Chargeable Gains Act 1992 41(2)
England and Wales
Citing:
Appeal FromSmallwood v Revenue and Customs SCIT 3-Nov-2005
SCIT CAPITAL GAINS TAX – Allowable losses – Disposal of units in enterprise zone property unit trust – Capital allowances made to Appellant – Whether Appellant’s allowable expenditure to be restricted by capital . .

Cited by:
Appeal fromHM Revenue and Customs v Smallwood CA 17-May-2007
The taxpayer had put money into a enterprise zone property unit trust. That money had gone into refurbishment. Several years later the property was sold with a substantial profit, and the trust managers arranged the distributions so that no . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.243155

Inland Revenue Commissioners v John Lewis Properties Ltd: CA 20 Dec 2002

The taxpayer company purchased properties to be occupied by other companies within the same group. Having granted leases, they assigned the rental income for the first six years to a bank in return for a capital payment. They then sought relief from tax, claiming to have made a part disposal, and for roll-over relief.
Held: The question of whether a receipt was income or capital is not susceptible to a simple rule of general application. Here factors affecting the decision were that the disposal was of a long lasting asset, the substantial value involved, the diminution of the value of the asset (despite that being impermanent), and that only one lump sum payment was made. The payment was a capital one.
Schiemann, Arden, Dyson LJJ
Times 16-Jan-2003, Gazette 13-Mar-2003, [2002] EWCA Civ 1869, [2002] 1 WLR 35
Bailii
Finance Act 2000 110, Taxation of Chargeable Gains Act 1992 21(2)
England and Wales
Citing:
CitedMacNiven (Inspector of Taxes) v Westmoreland Investments Ltd HL 15-Feb-2001
The fact that a payment of interest was made only to create a tax advantage did not prevent its being properly claimed. Interest was paid for the purposes of setting it against tax, when the debt was discharged. A company with substantial losses had . .
CitedRegent Oil Co Ltd v Strick (Inspector of Taxes) HL 27-Jul-1965
HL Income tax, Schedule D – Profits tax – Deduction – Oil dealing company – Exclusivity agreement with retailers – Premises leased from retailer and sublet to him – Whether premium for lease paid on capital or . .
Appeal FromCommissioners of Inland Revenue v John Lewis Properties Ltd ChD 13-Jun-2001
A group of companies took leases from a company within the group. That company, in turn factored the right to receive the rents for five years to another company in return for a capital payment representing the discounted value of the future rent . .

Cited by:
CitedScribes West Ltd v Relsa Anstalt and others CA 20-Dec-2004
The claimant challenged the forfeiture of its lease by a freeholder which had acquired the registered freehold title but had not yet registered its ownership. The second defendant had forfeited the lease by peacable re-entry for arrears of rent, and . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.178766

Commissioners of Inland Revenue v John Lewis Properties Ltd: ChD 13 Jun 2001

A group of companies took leases from a company within the group. That company, in turn factored the right to receive the rents for five years to another company in return for a capital payment representing the discounted value of the future rent receipts. It then claimed this as a capital rather than an income receipt, and was taxable accordingly. The Commissioners asserted that it remained income.
Held: The appeal failed. The case fell to be decided by the common law of tax rather than statute law. The sale was of an asset not in the course of trade and, as such, and however reluctantly, had to be held to produce a capital receipt and taxed accordingly.
Lightman J
Times 22-Jun-2001, Gazette 05-Jul-2001, [2001] EWHC Ch 409, [2002] 1 WLR 35, [2001] STC 1118, [2001] BTC 213, [2001] STI 937
Bailii
England and Wales
Cited by:
Appeal FromInland Revenue Commissioners v John Lewis Properties Ltd CA 20-Dec-2002
The taxpayer company purchased properties to be occupied by other companies within the same group. Having granted leases, they assigned the rental income for the first six years to a bank in return for a capital payment. They then sought relief from . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.163025

MacNiven (Inspector of Taxes) v Westmoreland Investments Ltd: HL 15 Feb 2001

The fact that a payment of interest was made only to create a tax advantage did not prevent its being properly claimed. Interest was paid for the purposes of setting it against tax, when the debt was discharged. A company with substantial losses had been sold to a company who sought to set those losses against its own profits. An additional loan had to be made to pay off the interests and to allow the claim to proceed. Ramsay decided that when it is sought to attach a tax consequence to a transaction, the courts must ascertain the legal nature of the transaction. If that emerges from a series or combination of transactions, intended to operate as such, it is that series or combination which may be regarded. Courts are entitled to look at a pre-arranged tax avoidance scheme as a whole. It matters not whether the parties intention to proceed with a scheme through all its stages takes the form of a contractual obligation or is expressed only as an expectation without contractual force. Lord Nicholls of Birkenhead: ‘The paramount question always is one of interpretation of the particular statutory provision and its application to the facts of the case.’ Lord Hoffmann: If a statute laid down requirements by reference to some commercial concept such as gain or loss, it would usually follow that elements inserted into a composite transaction without any commercial purpose could be disregarded, whereas if the requirements of the statute were purely by reference to its legal nature (here the discharge of a debt) then an act having that legal effect would suffice, whatever its commercial purpose may have been.
Lord Nicholls of Birkenhead, Lord Hoffmann
Gazette 15-Feb-2001, Times 14-Feb-2001, [2001] UKHL 6, [2001] 1 All ER 865, (2001) 73 TC 1, [2001] 2 WLR 377, [2003] 1 AC 311
House of Lords, Bailii
Income and Corporation Taxes Act 1988 338(3)
England and Wales
Citing:
ExplainedW T Ramsay Ltd v Inland Revenue Commissioners HL 12-Mar-1981
The taxpayers used schemes to create allowable losses, and now appealed assessment to tax. The schemes involved a series of transactions none of which were a sham, but which had the effect of cancelling each other out.
Held: If the true nature . .
At CAMcNiven (Inspector of Taxes) v Westmoreland Investments Ltd CA 26-Oct-1998
Cross loans were made between an investment company and pension schemes. The overall effect was to create payments which could be set off against Corporation Tax. They were not a pre-ordained series of transactions where the underlying loans were . .
At ChdMcNiven (Inspector of Taxes) v Westmoreland Investments Ltd ChD 19-Aug-1997
Loans made between associated companies for the sole purpose of creating a charge to tax were ineffective as avoidance scheme. . .

Cited by:
CitedInland Revenue Commissioners v John Lewis Properties Ltd CA 20-Dec-2002
The taxpayer company purchased properties to be occupied by other companies within the same group. Having granted leases, they assigned the rental income for the first six years to a bank in return for a capital payment. They then sought relief from . .
CitedGrimm 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 . .
CitedBMBF (No 24) Limited v the Commissioners of Inland Revenue CA 6-Nov-2003
The taxpayer, a non-resident, operated a sale and lease back scheme of machinery to be used in its business within the UK. There had been a chain of leases.
Held: The court had first to identify the ‘relevant lease’. It was the head lease . .
CitedBrian Andrew O’Neil, Moira O’Neil, Lyndon Lee McDougall, and John James McDougall v Commissioner of Inland Revenue PC 10-Apr-2001
PC (New Zealand) An accountant arranged a scheme which purported to return the applicants’ entire income without deduction of tax as a return of capital. The revenue sought to treat it as tax avoidance.
CitedMacDonald (HM Inspector of Taxes) v Dextra Accessories Ltd and others CA 28-Jan-2004
The company had set up a trust for the benefit of its employees. The Inspector sought to tax the payments made into the trust as ’emoluments’
Held: The appeal was allowed. The payments were ‘potential emoluments’ which were held by the . .
CitedBarclays Mercantile Business Finance Ltd v Mawson (HM Inspector of Taxes) HL 25-Nov-2004
The company had paid substantial sums out in establishing a gas pipeline, and claimed those sums against its tax as capital allowances. The transaction involved a sale and leaseback arrangement which the special commissioners had found to be a . .
CitedTotal Network Sl v Revenue and Customs HL 12-Mar-2008
The House was asked whether an action for unlawful means conspiracy was available against a participant in a missing trader intra-community, or carousel, fraud. The company appealed a finding of liability saying that the VAT Act and Regulations . .
CitedCollector of Stamp Revenue v Arrowtown Assets Ltd 4-Dec-2003
(Hong Kong Final Court of Appeal) The court was asked as to the accounting treatment of interests incurred in the development for the purpose of generating the profits, and therefore whether the relevant Ordinance prohibited the capitalisation of . .
CitedCampbell v Inland Revenue Commissioners SCIT 6-Jul-2004
SCIT INCOME TAX – Anti-Avoidance – Relevant discounted security – Loss on gift to wife – Subscription for security and gift part of scheme to produce loss – Avoidance not the Appellant’s sole purpose in . .
CitedUBS Ag and Another v Revenue and Customs SC 9-Mar-2016
UBS AG devised an employee bonus scheme to take advantage of the provisions of Chapter 2 of the 2003 Act, with the sole purpose other than tax avoidance, and such consequential advantages as would flow from tax avoidance. Several pre-ordained steps . .
CitedProject Blue Ltd v Revenue and Customs SC 13-Jun-2018
The purchaser of land created a sub-sale and leaseback with bank so as to fund the purchase in a manner which would comply with Islamic finance principles. The Court was now asked whether purchaser or the bank were liable for stamp duty land tax on . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.83286

Wood v Holden (Inspector of Taxes): ChD 8 Apr 2005

The parties had entered into complex share transactions for the sale of their trading business, and sought to avoid liability for capital gains tax.
Held: Gains on disposals between members of a non-resident group of companies were exempt. The test for corporate residence was set out in De Beers Consolidated Mines. The relevant company was not a resident company under those criteria and the scheme succeeded.
Park J
[2005] EWHC 547 (Ch), Times 10-May-2005, [2005] STC 789
Bailii
England and Wales
Citing:
CitedDe Beers Consolidated Mines Ltd v Howe, Surveyor of Taxes HL 1905
The appellant Company was registered in the Cape Colony and it’s business was mining for diamonds in mines which it possessed in South Africa, and selling the diamonds there under annual contracts to a syndicate for delivery there. The Head Office . .
CitedCalcutta Jute Mills Co Ltd v Nicholson 1876
(Court of Exchequer) The residence of a company for tax purposes is decided by where the ‘central management and control’ is. . .
CitedIn Re Little Olympian Eachways Ltd ChD 29-Jul-1994
A Jersey company (Supreme) had brought a petition under the section against the company. An application was made for security for costs against Supreme. It could only be made if Supreme was resident outside the UK. Supreme argued that, despite being . .
CitedUnit Construction Co Ltd v Bullock HL 30-Nov-1959
The UK parent company owned subsidiaries incorporated in East Africa and carried on trading activities there. The managing director of the parent company concluded that ‘the situation of the African subsidiaries was becoming so serious that it was . .
CitedEsquire Nominees Ltd v Commissioner of Taxation 1971
(High Court of Australia) The company had directors who lived on Norfolk Island, but also had close connections with an Australian firm of accountants (WBBC), which evolved and implemented a tax scheme for an Australian family. The company acted as . .

Cited by:
CitedUnit Construction Co Ltd v Bullock HL 30-Nov-1959
The UK parent company owned subsidiaries incorporated in East Africa and carried on trading activities there. The managing director of the parent company concluded that ‘the situation of the African subsidiaries was becoming so serious that it was . .
Appeal fromWood and Another v Holden (HMIT) CA 26-Jan-2006
Husband and wife sold their business, arranging matters so as to avoid paying Capital Gains Tax by transferring their interest between members of a group of companies which was non-resident.
Held: The scheme was effective. The sole real issue . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.224770

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 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 fromJerome 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 . .
CitedBurnett’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 . .
CitedEastham 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 . .
CitedLysaght 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 . .
CitedShaw 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 . .
CitedKirby v Thorn EMI Plc 1987
Taxation of asset assigned before it was created. . .
CitedRayner 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: . .
CitedAberdeen 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 . .
CitedChang 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 . .
CitedMarshall (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 . .
CitedBurca 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 toJerome 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 . .
CitedCook 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 . .
CitedScott 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

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 imposed the obligation to dispose of the land on the original contractors, the taxpayers, and under section 27(1), the effective date of the disposal was that of the contract, not the date when the obligation was performed: ‘where the owner of an asset contracts to convey or transfer it, and the contract is subsequently completed, the disposal of the asset for capital gains tax purposes takes place when the contractual obligation is created and not when it is performed’.
Lord Justice Jonathan Parker, Lady Justice Hale, Lord Justice Schiemann
Times 02-Jan-2003, Gazette 16-Jan-2003, [2002] EWCA Civ 1879
Bailii
Capital Gains Act 1992 27 28 46(1)
England and Wales
Citing:
Appeal fromJerome v Kelly (Inspector of Taxes) ChD 15-Apr-2002
The land was owned by members of family in undivided shares. Contracts were exchanged for its sale, but the land was divided before the sale was completed. Part of the land had come to be in the ownership of trusts in Bermuda. The Inspector sought . .
CitedLysaght 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 . .
Appealed toJerome 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 . .
CitedSwiss Bank Corporation v Lloyds Bank Ltd CA 1981
An equitable charge is created when property is expressly or constructively made liable to the discharge of a debt or some other obligation, and the charge confers on the chargee a right of realisation by judicial process such as a sale order. . .

Cited by:
Appealed toJerome v Kelly (Inspector of Taxes) ChD 15-Apr-2002
The land was owned by members of family in undivided shares. Contracts were exchanged for its sale, but the land was divided before the sale was completed. Part of the land had come to be in the ownership of trusts in Bermuda. The Inspector sought . .
Appeal fromJerome 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 . .

These lists may be incomplete.
Updated: 17 July 2021; Ref: scu.178545