A settlor by will was deemed to have had an interest as funds were passed to a Jersey Trust. The section merely made or allowed that a variation of a will would not be a taxable event in UK law. It had no other effects. A deed of family arrangement can be a chargeable event for foreign settlements. Though the House allowed the appeal, it approved the CA’s approach to the interpretation of deeming provisions.
Lord Browne-Wilkinson summarised the law: ‘In English law the rights of a testamentary legatee in the unadministered estate of a testator are well settled: see Lord Sudeley v. Attorney-General [1897] AC 11 and Commissioner of Stamp Duties (Queensland) v. Livingston [1965] AC 694 . . A legatee’s right is to have the estate duly administered by the personal representatives in accordance with law. But during the period of administration the legatee has no legal or equitable interest in the assets comprised in the estate.’
. . And ‘it is crucial to appreciate that the property settled by [the legatee] comprised, not the assets in the deceased’s estate . . but a separate chose in action, the right to due administration of his estate.’
HL Capital gains tax – Settlements – Deceased not resident in United Kingdom – Share of residuary estate accruing to his UK resident daughter – Trust effected by instrument of variation within 2 years of death – Trustee not resident in the United Kingdom – Capital payments made to daughter by trustee – Whether gains chargeable as daughter was settlor, or not chargeable as deceased was settlor – Finance Act 1965, .v.v 24(7), 24(11) and 42, Finance Act 1981, ss 80 – 85.
Lord Browne-Wilkinson
Times 05-Jul-1994, Gazette 03-Aug-1994, Ind Summary 18-Jul-1994, [1994] STC 148, [1995] 1 AC 148, [1994] UKHL TC – 67 – 56
Bailii
Finance Act 1981 80, Finance Act 1965 24(11), Taxation of Chargeable Gains Act 1992 62(6)
England and Wales
Citing:
Appeal from – Marshall (Inspector of Taxes) v Kerr CA 7-Apr-1993
A variation of trusts in Jersey will be deemed to have been made by the deceased – no Capital Gains Tax arising. Interpretation of deeming Provisions. The taxpayer was not a settlor in an overseas trust. Deeming provisions should not generally be . .
Cited – Sudeley v Attorney-General HL 1897
The husband had died leaving part of his residuary estate to his widow. She then died before the estate was fully administered. Both died domiciled in England. The husband’s estate included mortgages of land in New Zealand and the House was asked . .
Cited – Commissioner of Stamp Duties (Queensland) v Livingston PC 7-Oct-1964
A testator had died domiciled in New South Wales and with real and personal property both in New South Wales and in Queensland. He left one-third of his real and personal estate to his widow absolutely. She then died intestate, also domiciled in New . .
Cited by:
Cited – Jerome v Kelly (Her Majesty’s Inspector of Taxes) HL 13-May-2004
In 1987, trustees holding land for various beneficiaries in undivided shares entered into a contract to sell it to a purchaser. In 1989 Mr and Mrs Jerome, who were absolutely entitled to interests in the land, assigned part of their beneficial . .
Cited – Jenks v Dickinson (Inspector of Taxes) ChD 16-Jun-1997
Legislation which created a clear anomaly can be interpreted so as to avoid the anomaly if the words used are sufficiently ambiguous as to allow an alternative construction.
Neuberger J discussed the case of Marshall v Kerr, saying: ‘It appears . .
Cited – Revenue and Customs v DCC Holdings (UK) Ltd SC 15-Dec-2010
The taxpayer had entered into a ‘repo’ loan to its bank, agreeing to purchase a block of gilt edged securities, and to resell them at a later date at a fixed figure. The profit and figures included an allowance for the interest payments to be made. . .
Cited – Raymond Saul and Co (A Firm) v Holden and Another; In re Hemming (deceased) ChD 12-Nov-2008
The claimant was sole residuary legatee of his mother’s estate. He became bankrupt, but was released by automatic discharge from the bankruptcy before the administration of the estate was completed. He challenged the solicitors who wished to pay the . .
Cited – Fowler v Revenue and Customs SC 20-May-2020
The taxpayer, a diver resident in South Africa had undertaken engagements within UK waters and now disputed his liability to Income Tax using a deeming provision in section 5 of the 2005 Act being self employed.
Held: HMRC’s appeal succeeded. . .
Lists of cited by and citing cases may be incomplete.
Updated: 23 October 2021; Ref: scu.83428 br>