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 wife by the formation agents. The share carried more than the income, having full voting and other rights, and it could not be seen as a mere translation of the husband’s income.
Judges:
Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe, Baroness Hale of Richmond, Lord Neuberger of Abbotsbury
Citations:
[2007] UKHL 35, Times 09-Aug-2007, [2007] 1 WLR 2030
Links:
Statutes:
Income and Corporation Taxes Act 1988
Jurisdiction:
England and Wales
Citing:
At First Instance – Jones v Garnett (Inspector of Taxes) ChD 28-Apr-2005
The taxpayer worked as an information technology specialist. His earnings were channelled through a limited company. The company paid on part of its income to his wife, with the result that the total tax paid was reduced. The inspector sought to tax . .
Appeal From – Jones 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 . .
Cited – Inland 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 – Crossland v Hawkins CA 1961
The taxpayer, a well known film actor, agreed to work through a company for three years being paid andpound;50 per week. The shares were transferred to his wife and accountant. His father in law set up a andpound;100 settlement for the benefit of . .
Distinguished – Young v Pearce 1996
The company created a special class of preference shares and allotted them to the wives of the two shareholders and directors. When substantial preference dividends were paid to the wives, the husbands were assessed to tax on them. They conceded . .
Cited – Butler 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, . .
Cited – Inland Revenue Commisioners v Leiner 1964
An interest free loan was made to an associated company from the taxpayer’s mother which was then replaced by another interest free loan from the taxpayer. The circle of loans included an interest bearing loan to the taxpayer from the trustees of a . .
Cited – 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 . .
Lists of cited by and citing cases may be incomplete.
Company, Income Tax
Updated: 11 July 2022; Ref: scu.258393