The taxpayers appealed a notice under section 703(3) to counteract the tax advantage received by them from a share buy-back scheme. The scheme was an approved pension scheme, under which the quoted company agreed to buy back its own shares.
Held: The excess paid over the market value by the company was to be treated as a qualifying distribution under section 231, creating a tax credit. Under Joiner section 703 was not primarily targeted at contrived transactions, but rather at all forms of tax avoidance within its scope. What had to be considered was the normality of the amount paid, but that was not judging a distribution as against a normal dividend, but a qualifying distribution of a different kind. The judge had asked himself the wrong question. Appeal allowed.
Judges:
Aldous, Jonathan Parker, Aikens LJJ
Citations:
Times 17-Jan-2003, Gazette 13-Mar-2003, [2002] EWCA Civ 1857
Links:
Statutes:
Income and Corporation Taxes Act 1988 592 703(1) 704A 709
Jurisdiction:
England and Wales
Citing:
Cited – Inland Revenue Commissioners v Joiner HL 26-Nov-1975
HL Surtax – Tax advantage – Transaction in securities – Company recon- struction – Surplus assets o f old company distributed in voluntary liquidation – Agreement for liquidation providing for agreed methods o f . .
Appeal from – Inland Revenue Commissioners v Sema Group Pension Scheme Trustees ChD 7-Feb-2002
The Trustees of an exempt approved pension scheme bought shares, and sold them at a lower price to the company. Under the 1988 Act, this operated to create a tax credit. The revenue issued a notice and assessment under Schedule F to defeat that tax . .
Cited – Lomax v Peter Dixon and Son Ltd CA 1942
A substantial loan was made to be repaid on demand. An agreement was then made where the debtor issued to the creditor 680 loan notes of andpound;500 each, amounting in total to andpound;340,000 (a discount of 6%). The notes were to bear interest at . .
Lists of cited by and citing cases may be incomplete.
Income Tax, Company
Updated: 06 June 2022; Ref: scu.178700