Harmel v Wright: ChD 1973

The taxpayer was domiciled in South Africa but resident in England. Before he came to England he arranged for the incorporation of two companies, Artemis Ltd and Lodestar Ltd. Artemis was controlled by the taxpayer but Lodestar, in which he had no interest, was controlled by his business associates. The taxpayer arranged for his foreign emoluments to be applied in the subscription of shares in Artemis, the subscription moneys were lent by Artemis to Lodestar which lent them to the taxpayer in England. The taxpayer was assessed on the amounts of the loans from Lodestar under Case III of Schedule E. The assessment was upheld by the Special Commissioners. They found that all the transactions were parts of a pre-ordained plan and that the taxpayer had received foreign emoluments in the United Kingdom to the extent of the loans from Lodestar.
Held: The decision was upheld. First, as the sums lent by Lodestar to the taxpayer were traceable to the taxpayer’s foreign emoluments the latter were received by him in the United Kingdom and, second, the emoluments were used, enjoyed in and transmitted to the United Kingdom within the meaning of the predecessor of s.132(5) so as to constitute receipt.
Templeman J
(1973) 49 TC 149
England and Wales
CitedThomson v Moyse HL 1958
A British subject resident in England but domiciled in the United States was the life tenant of trusts administered in accordance with the law of the State of New York. The income of the trusts was paid in US$ into the beneficiary’s bank account . .

Cited by:
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 . .

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Updated: 10 March 2021; Ref: scu.183431