MacDonald (Inspector of Taxes) v Dextra Accessories Ltd and Others: ChD 16 Apr 2003

The inspector sought to disallow charging to current tax period payments made by the employer to an employee benefit trust.
Held: The payments were not made and held by the trustees ‘with a view to becoming relevant emoluments’ within the section, and so were deductible from profits. The provision sought to restrain charging against current income payments made for the benefit of employees but which benefit was then delayed in payment. The words ‘with a view to’ were to be construed to mean to the principal and dominant intention. The dominant purpose test was not satisfied because some or all of the benefits might be paid otherwise than as emoluments.
References: Times 25-Apr-2003, [2003] EWHC 872 (Ch), [2003] STC 749
Judges: Neuberger J
Statutes: Finance Act 1989 43(1)
Jurisdiction: England and Wales
This case cites:

  • Cited – W 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 . .
    ([1981] 1 All ER 865, [1982] AC 300, , [1981] UKHL 1, [1981] STC 174)
  • Cited – In re Cutts (a bankrupt); Ex parte Bognor Mutual Building Society CA 1956
    Decisions are often made not for a single reason but for a number.
    The phrase ‘with a view of’ a fraudulent preference was given to one creditor over others, it required it to be established what the person’s dominant intention was.
    Lord . .
    ([1956] 2 All ER 537, [1956] 1 WLR 728)
  • Appeal from – Dextra Accessories Ltd and others v Inspector of Taxes SCIT 25-Jul-2002
    SXIT EMPLOYEE BENEFIT TRUST – whether deduction of contributions postponed until taxable as emoluments under FA 1989 s.43(11) – no – whether sub-funds in favour of directors who controlled the company taxable as . .
    (, [2002] UKSC SPC00331, [2002] STC (SCD) 413)

This case is cited by:

  • Appeal from – MacDonald (HM Inspector of Taxes) v Dextra Accessories Ltd and others CA 28-Jan-2004
    The company had set up a trust for the benefit of its employees. The Inspector sought to tax the payments made into the trust as ’emoluments’
    Held: The appeal was allowed. The payments were ‘potential emoluments’ which were held by the . .
    (Times 03-Feb-04, , [2004] EWCA Civ 22, Gazette 04-Mar-04, [2004] STC 339)
  • At First instance – HM Inspector of Taxes v Dextra Accessories Ltd HL 7-Jul-2005
    The taxpayer companies had paid funds into a trust for employees. They sought to set off the payments against their liability to corporation tax. The revenue argued that they were deductible only in the year in which they were paid to the employees. . .
    (, [2005] UKHL 47, Times 11-Jul-05, , [2005] STC 1111, [2005] BTC 355, (2003) 77 TC 146, 77 TC 146, [2005] 4 All ER 107, [2005] STI 1235, [2005] Pens LR 395)

These lists may be incomplete.
Last Update: 21 November 2020; Ref: scu.181844