The taxpayer and her son owned through a trust the entire beneficial interest in the shares of a company. She agreed to transfer other shares to him in return for his interest in the shares subject to the trust, releasing the trust. The Revenue contended that there must be a deed giving effect to the transaction releasing the interest in the trust shares, and that it was subject to ad valorem stamp duty.
Held: Stamp duty was payable on documents only. Neverheless the transfer gave effect to a transfer within section 54 of the 1891 Act and was liable to ad valorem duty despite the low nominal consideration expressed in it.
Lord Radcliffe (dissenting) said that the existence of a document could not be inferred only from section 53 of the 1925 Act: ‘The duty is charged upon instruments, if they exist and come within any of the categories prescribed by the Act. It is not charged upon transactions.
Thus property such as chattels which by law pass on delivery can be transferred from one owner to another without attracting duty. Again, though an agreement for sale may be chargeable ad valorem, since the Act has so required, an oral agreement for the sale of property involves no charge to duty because no instrument is brought into existence to effect or to record it. The whole point of the present appeal seems to me to turn on the question whether it is open to a Court of Law to deduce from the documents of this case that Mrs. Oughtred’s title to her son’s equitable reversionary interest rested upon anything more than the oral agreement which admittedly took place.’
Lord Jenkins said: ‘I am unable to accept the conclusion that the disputed Transfer was prevented from being a transfer of the shares to the Appellant on sale because the entire beneficial interest in the settled shares was already vested in the Appellant under the constructive trust, and there was accordingly nothing left for the disputed Transfer to pass to the Appellant except the bare legal estate. The constructive trust in favour of a purchaser which arises on the conclusion of a contract for sale is founded upon the purchaser’s right to enforce the contract in proceedings for specific performance. In other words, he is treated in equity as entitled by virtue of the contract to the property which the vendor is bound under the contract to convey to him. This interest under the contract is no doubt a proprietary interest of a sort, which arises, so to speak, in anticipation of the execution of the Transfer for which the purchaser is entitled to call. But its existence has never (so far as I know) been held to prevent a subsequent transfer, in performance of the contract, of the property contracted to be sold from constituting for stamp duly purposes a transfer on sale of the property in question.’
Lord Radcliffe, Lord Cohen, Lord Keith of Avonholm, Lord Denning, Lord Jenkins
[1959] UKHL 3, [1960] AC 206
Bailii
Law of Property Act 1925 53(1), Stamp Act 1891 54
England and Wales
Citing:
Cited – Attorney General v Brown 1849
. .
Cited – Commissioners for Inland Revenue v Angus CA 14-Jun-1881
The court was asked whether an agreement for sale of property in the shape of goodwill amounted to a conveyance of the property for stamp duty purposes under section 70 of the 1870 Act.
Held: It did not.
Lord Evershed MR said: ‘The first . .
Cited by:
Cited – Robin Alexis Justin Keston, Helen Janet Keston v Commissioners of Inland Revenue ChD 27-Jan-2004
The claimants sought to reduce liability for stamp duty by arranging an intermediate sale to a company followed by a scheme of regular payments.
Held: The scheme was not effective to save stamp duty. The combined effect of the sections was to . .
Cited – Vandervell v Inland Revenue Commissioners HL 24-Nov-1966
The taxpayer made a gift of shares to a trust set up to fund a medical professorship. The shares were in a private company, and an option was given for their repurchase once a certain level of dividends had been attributed to them. He was assessed . .
Cited – Scott v Southern Pacific Mortgages Ltd and Others SC 22-Oct-2014
The appellant challenged a sale and rent back transaction. He said that the proposed purchaser had misrepresented the transaction to them. The Court was asked s whether the home owners had interests whose priority was protected by virtue of section . .
Lists of cited by and citing cases may be incomplete.
Stamp Duty, Contract
Leading Case
Updated: 12 November 2021; Ref: scu.248536