Chinn 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 statute descriptive of those classes of cases which are caught by the section in contrast to those which are not. The courts must, I think, be extremely careful not to interpret this descriptive word too rigidly . . What the cases have sought to do is to distinguish between those cases where the recipient has in return for that benefit which he has received accepted some obligation which he has to perform, either before receiving the benefit or at some stated time thereafter, and those cases where the recipient benefits without any assumption by him of any correlative obligation.’
HL Capital gains tax – Avoidance – Foreign trustees – Appointment to beneficiary of interest in shares contingent on survivalfor three days – Immediate sale by him to foreign company coupled with contract to repurchase shares on fourth day – Whether scheme effective to avoid apportionment of gain to beneficiary – Finance Act 1965 (c 25), ss 25(3) and 42(2) and Sch 7, para 13(1).
The House was considering whether an emolument could be said to arise ‘from’ a taxpayer’s employment or office, Lord Radcliffe cited various judicial statements and stated: ‘These are all glosses, and they are all of value as illustrating the idea which is expressed by the words of the statute. But it is perhaps worth observing that they do not displace those words’.

Lord Roskill, Lord Radcliffe
[1981] 1 All ER 189, [1981] AC 533, [1980] UKHL TC – 54 – 311, [1981] 2 WLR 14, 54 TC 311, [1980] TR 467, [1981] STC 1
Finance Act 1965 25(3) 42(2)
England and Wales
CitedInland 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 . .

Cited by:
AppliedW 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 . .
CitedJones v Michael Vincent Garnett (HM Inspector of Taxes) CA 15-Dec-2005
Husband and wife had been shareholders in a company, the wife being recorded as company secretary. The company paid dividenceds to both. The husband appealed a decision that the payment to his wife was by way of a settlement and was taxable in his . .
CitedButler v Wildin 1988
Two brothers acquired a company and were the sole directors. 19 shares each were acquired by the children with their own money. Two later born children also acquired 19 shares therein with their own money from their respective fathers and others, . .
CitedJones v Garnett (Her Majesty’s Inspector of Taxes) HL 25-Jul-2007
The husband and wife had each owned a share in a company which sold the services of the husband. The Revenue claimed that the payment of dividends to the wife was a settlement.
Held: The Revenue failed. The share had been transferred to the . .
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 . .
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 . .

Lists of cited by and citing cases may be incomplete.

Taxes Management, Income Tax, Capital Gains Tax

Updated: 21 December 2021; Ref: scu.559790