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Capital Gains Tax - From: 1980 To: 1984
This page lists 8 cases, and was prepared on 20 May 2019.
Marren (Inspector of Taxes) v Ingles [1980] UKHL TC - 54 - 76; [1980] STC 500; 54 TC 76; [1980] TR 335; [1980] 1 WLR 983; [1980] 3 All ER 95
24 Jul 1980
HL
Capital Gains Tax
HL Capital gains tax - Disposal of shares - Whether rights to receive deferred payments constituted "incorporeal property" - Whether a disposal of such property on such payments being made - Finance Act 1965 (c 25), ss 22(1) and 22(3).
Finance Act 1965 22(1) 22(3)
[ Bailii ]
Chinn v Hochstrasser (Inspector of Taxes) [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
11 Dec 1980
HL
Lord Roskill
Taxes Management, Income Tax, Capital Gains Tax
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).
Finance Act 1965 25(3) 42(2)
1 Cites
1 Citers
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Roome v Edwards [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
5 Feb 1981
HL
Lord Wilberforce, Lord Roskill
Capital Gains Tax, Trusts
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."
Trustee Act 1925 37
1 Citers
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W T Ramsay Ltd v Inland Revenue Commissioners; HL 12-Mar-1981 - [1981] 1 All ER 865; [1982] AC 300; [1981] UKHL 1; [1981] STC 174
Inland Revenue v Burmah Oil Co Ltd; HL 1982 - 1982 SC (HL) 114
Berry v Warnett (Inspector of Taxes) [1982] UKHL TC - 55 - 92; 55 TC 92; [1982] 2 All ER 630; [1982] 1 WLR 698; [1982] BTC 239; [1982] STC 396
6 May 1982
HL
Capital Gains Tax
HL Capital gains tax - Settled property - Gift in settlement - Part disposal - Connected persons - Assignment of reversion followed by assignment of life interest - Whether the first assignment was only a part disposal - Finance Act 1965 (c 25), ss 22(2), 22(4), 25(2) and Sch 7, paras 17 and 21; Income and Corporation Taxes Act 1970 (c 10), s 454(3).
[ Bailii ]
Leedale (Inspector of Taxes) v Lewis [1982] 1 WLR 1319; [1982] 3 All ER 808; [1982] UKHL TC - 56 - 501
14 Oct 1982
HL
Lord Wilberforce, Lord Scarman, Lord Roskill and Lord Brandon
Capital Gains Tax, Trusts
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. The persons in question only had discretionary interests in the settled property. Held: Such discretionary beneficiaries did have 'interests in settled property' for the purposes of s 42(2) of the 1965 Act.
The House considered the argument that interpretation of a taxing statute might cause hardship.
Lord Scarman characterised the term "beneficiary" as: 'a term which everyone is agreed includes persons who are the objects of the discretionary trusts'.
Lord Wilberforce said: "I would only refer to one other argument, that based on the alleged 'hardship' of accepting the Revenue's contention. I do not think that this is a relevant consideration at all. If there were two equally possible constructions of this subsection, it might be correct to choose that which is the more favourable to the taxpayer, on the basis that subjects can only be taxed by clear words. This principle cannot apply where there are decisive legal reasons for preferring one construction rather than another. Once this step has been taken considerations of 'hardship' do not enter into the discussion." and "Settlors, after 1965, make their settlements with knowledge of the legislation and of its consequences."
. . And "The key question is as to the meaning of the word "interests" in section 42(2) of the Finance Act 1965, the alternatives being whether this word refers only to such interests as can be assigned a value, or whether it is a word of more general significance capable of covering any interest, quantifiable or non-quantifiable, of a beneficiary under a trust. That either of these is a possible meaning in fiscal legislation is made clear (a) by the general observations of Lord Reid in Gartside v. Inland Revenue Commissioners [1968] A.C. 533 [sic], 603 (see also those of Stephen J. and Wills J. in Attorney-General v. Heywood (1887) 19 Q.B.D. 326) and (b) by a comparison of the cases just cited. In Heywood, which arose under section 38 of the Customs and Inland Revenue Act 1881, and where the question was whether the settlor had reserved "an interest" by including himself among a discretionary class of beneficiaries, the word "interest" was given the more general meaning. To require that it meant something to which an ascertainable value could be assigned would, it was held, be contrary to the scheme of the statute. In Gartside, on the other hand, which arose under section 43 of the Finance Act 1940, and where the question was whether estate duty would be charged in respect of the determination of a discretionary interest, this House held that the word must bear the narrower meaning because the statute necessarily required ascertainment of the quantum of the interest. In Gartside I expressed the opinion, from which the other members of the House did not dissent, that these two cases could stand together. The word "interest" is one of uncertain meaning and it remains to be decided on the terms of the applicable statute which, or possibly what other, meaning the word may bear. The appellant contends for the narrower meaning, and can find some support in section 42 of the Act of 1965. There is the reference to "values" in subsection (2). There is subsection (3) which, he contends, sets out a code for assigning values to discretionary interests in income or capital - an exclusive code within one of whose provisions a case must fall if a charge to tax in respect of a discretionary trust is to arise. There is, thirdly, the reference, in subsection (2), to a life interest or an interest in reversion, but, in my opinion this does not survive a first critical look: the reference is clearly illustrative and nothing more. The two main arguments are by no means negligible, but they are, in my opinion, greatly outweighed by those on the other side. I simply state them, as they impressed me; they are developed in discussion in the Court of Appeal's judgment. 1. The initial words of subsection (2) are "any beneficiary". Unless clearly directed otherwise, I would assume that "persons having interests" was correlative to these words. Discretionary objects are clearly "beneficiaries", so I would suppose them also to be included in "persons having interests." 2. The apportionment to be made under the subsection is mandatory. The amount of the gains - i.e., the whole amount - must be apportioned in the relevant year of assessment. This can only be done if discretionary objects, who may be the only "beneficiaries" in that year, can be the objects of apportionment. 3. The words, in subsection (2), "in such manner as is just and reasonable" and "as near as may be, according to the respective values of those interests" suggest a broad rather than an actuarial approach in which all relevant considerations may be taken into account. They permit, inter alia, consideration of the settlor's letter of intent which shows, at least, that the settlement was to be regarded as for the benefit of the grandchildren, not of the settlor's two children. 4. That subsection (3) represents an exclusive code is in my opinion not supported by the form of the section. On the contrary, the structure of it suggests that subsection (2) is the main and general charging provision, subsection (3) being auxiliary and confined to particular cases. These considerations together convince me that an apportionment in respect of "interests" under a discretionary trust can, indeed must, be made. "
HL Capital gains tax - Gains accruing to trustee resident outside the UK - UK - resident beneficiaries being both potential objects of discretionary power and having interests contingent on surviving to a specified day - Whether apportionment of gains amongst beneficiaries mandatory - Whether relevant to consider hardship - Manner of apportionment - Finance Act 1965, s 42.
Finance Act 1965 42(2)
1 Citers
[ Bailii ]
Gubay v Kington (Inspector of Taxes) [1984] UKHL TC - 57 - 601; [1984] STC 99; 57 TC 601; [1984] 1 All ER 513; [1984] 1 WLR 163
26 Jan 1984
HL
Capital Gains Tax
Capital gains tax - Disposal from husband to wife - Whether relief governed by condition as to residence of spouses - Whether person resident in U.K. for a year of assessment when so resident for part only of year - Whether relief applied even if one spouse not resident in U.K. - Finance Act 1965, s 45(3) and Sch 7, para 20(1) - Income and Corporation Taxes Act 1970, 5 42(2).
[ Bailii ]
