Capital Gains Tax/Taxation of Chargeable Gains : Computation

[2015] UKFTT 220 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 30 December 2021; Ref: scu.547370

The taxpayer had accepted a grant toward the building of a new club house. They sought rollover relief on the proceeds of sale of the former club house. The inspector sought to restrict the claim to exclude the benefit of the grant.
Held: The grant was not to be taken into account. Section 50 did not apply to reduce the allowance claimed under section 152. Nothing in either section referred to the other so as to establish a link, and the case of Watton established that there was none.

Mr Justice Ferris
Times 29-May-2002, Gazette 13-Jun-2002
Taxation of Chargeable Gains Act 1992 50 152
England and Wales
Citing:
Cited – Watton (Inspector of Taxes) v Tippett CA 27-Jun-1997
Proceeds of the sale of part of a business which had been invested back into the business cannot be rolled over into the acquisition cost of remainder. . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Updated: 11 December 2021; Ref: scu.171304

TAX – capital gains tax – residential premises – leasehold – value at 31 March 1982 – comparables – marriage value – share of undivided beneficial interest – value of leasehold interest determined at pounds 3,164 – appeal allowed in part

[2014] UKUT 184 (LC)
Bailii
England and Wales

Capital Gains Tax

Updated: 03 December 2021; Ref: scu.525944

UTTC Capital Gains Tax – Relationship between Enterprise Investment Scheme relief and Taper Relief in relation to properties that had been used for both business and nonbusiness purposes, either concurrently or at different times, in the period of ownership by the taxpayer – Appeal allowed

[2014] UKUT 165 (TCC)
Bailii
England and Wales

Capital Gains Tax

Updated: 03 December 2021; Ref: scu.525887

CAPITAL GAINS TAX – expenditure incurred on an asset.

[2014] UKFTT 103 (TC)
Bailii
England and Wales

Capital Gains Tax

Updated: 30 November 2021; Ref: scu.521670

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 read to produce an unjust or absurd result.
Peter Gibson LJ said: ‘I take the correct approach in construing a deeming provision to be to give the words used their ordinary and natural meaning, consistent so far as possible with the policy of the Act and the purposes of the provisions so far as such policy and purposes can be ascertained; but if such construction would lead to injustice or absurdity, the application of the statutory fiction should be limited to the extent needed to avoid such injustice or absurdity, unless such application would clearly be within the purposes of the fiction. I further bear in mind that, because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so.’
Peter Gibson LJ, Lord Browne-Wilkinson
Gazette 07-Apr-1993, Ind Summary 26-Apr-1993, [1993] STC 360, (1993) 67 TC 56
Finance Act 1965 24(7) 24(11), Taxation of Chargeable Gains Act 1992 62(4) 62(6)
England and Wales
Citing:
Appeal from – Marshall (Inspector of Taxes) v Kerr ChD 22-Jan-1992
A payment made from an estate which had been settled overseas by means of a deed of variation was deemed to have been a payment by the settlor, and taxable as such. In interpreting a deeming provision, the court musty consider carefully as between . .

Cited by:
Appeal from – Marshall (Inspector of Taxes) v Kerr HL 30-Jun-1994
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 . .
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. . .

Lists of cited by and citing cases may be incomplete.
Updated: 23 October 2021; Ref: scu.83430

In order to claim relief against Capital Gains tax on the disposal of business assets on retirement, the assets could be disposed of separately, but some connection must be shown to establish that they formed part of the same transaction overall. A businessman disposed of different parts of his business to different people, but in reality there was no effective same transaction. The business had been structured to allow disposals of different parts of it, and the fact that they were almost at the same time was mere co-incidence.
Gazette 30-Nov-2000, Times 23-Nov-2000
Taxation of Chargeable Gains Act 1992 69
England and Wales

Updated: 01 October 2021; Ref: scu.85084

Currency fluctuation losses arising from a loan to a subsidiary overseas company were not allowable against capital gains tax. The words ‘the debt on a security’ in section 117(1)can refer to an obligation to pay or repay embodied in the Loan Note, which is evidence of the right to receive payment.
Times 24-Mar-1997, [1997] STC 499
Capital Gains Tax Act 1979 117 134
England and Wales
Cited by:
Appeal from – Taylor Clark International Limited v Lewis (HM Inspector of Taxes) CA 18-Nov-1998
Security exchange losses on interest-bearing loan were not to be set off against capital gains as being a debt on a security even though secured. Being simply secured itself was insufficient to make a debt a debt on a security. . .
Cited – Harding v Revenue and Customs CA 23-Oct-2008
Lapsed Currency conversion option lost status
The taxpayer appealed his assessment to Capital Gains Tax on his redemption of loan notes arising following the sale of his computer company. He said that they were qualifying corporate bonds. The question was whether a security in which a currency . .

Lists of cited by and citing cases may be incomplete.
Updated: 30 July 2021; Ref: scu.89737

The parties had entered into complex share transactions for the sale of their trading business, and sought to avoid liability for capital gains tax.
Held: Gains on disposals between members of a non-resident group of companies were exempt. The test for corporate residence was set out in De Beers Consolidated Mines. The relevant company was not a resident company under those criteria and the scheme succeeded.
Park J
[2005] EWHC 547 (Ch), Times 10-May-2005, [2005] STC 789
Bailii
England and Wales
Citing:
Cited – De Beers Consolidated Mines Ltd v Howe, Surveyor of Taxes HL 1905
The appellant Company was registered in the Cape Colony and it’s business was mining for diamonds in mines which it possessed in South Africa, and selling the diamonds there under annual contracts to a syndicate for delivery there. The Head Office . .
Cited – Calcutta Jute Mills Co Ltd v Nicholson 1876
(Court of Exchequer) The residence of a company for tax purposes is decided by where the ‘central management and control’ is. . .
Cited – In Re Little Olympian Eachways Ltd ChD 29-Jul-1994
A Jersey company (Supreme) had brought a petition under the section against the company. An application was made for security for costs against Supreme. It could only be made if Supreme was resident outside the UK. Supreme argued that, despite being . .
Cited – Unit Construction Co Ltd v Bullock HL 30-Nov-1959
The UK parent company owned subsidiaries incorporated in East Africa and carried on trading activities there. The managing director of the parent company concluded that ‘the situation of the African subsidiaries was becoming so serious that it was . .
Cited – Esquire Nominees Ltd v Commissioner of Taxation 1971
(High Court of Australia) The company had directors who lived on Norfolk Island, but also had close connections with an Australian firm of accountants (WBBC), which evolved and implemented a tax scheme for an Australian family. The company acted as . .

Cited by:
Cited – Unit Construction Co Ltd v Bullock HL 30-Nov-1959
The UK parent company owned subsidiaries incorporated in East Africa and carried on trading activities there. The managing director of the parent company concluded that ‘the situation of the African subsidiaries was becoming so serious that it was . .
Appeal from – Wood and Another v Holden (HMIT) CA 26-Jan-2006
Husband and wife sold their business, arranging matters so as to avoid paying Capital Gains Tax by transferring their interest between members of a group of companies which was non-resident.
Held: The scheme was effective. The sole real issue . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.224770

Transfer of trust assets by trustee of non-resident settlement to trustees of new UK-resident settlement – asset transfer linked with trustee borrowing – capital distributions subsequently made by latter settlement to beneficiaries who are also beneficiaries of first settlement – common ground that the realised trust gains of the first settlement were not transferred to the new settlement pursuant to section 90 Taxation of Chargeable Gains Act 1992 (‘TCGA’) as a result of the effect of subsection 90(5)(a) TCGA – ‘Flip Flop Mark II’ scheme – whether the capital payments could be treated as ‘received from’ both the trustee of the earlier settlement indirectly and the trustees of the new settlement within the meaning and for the purposes of subsections 87(4) and 97(5)(a) TCGA – no – the FTT ( [2013] UKFTT 366 (TC) ) erred in law in so holding – whether, on the undisputed findings of fact of the FTT, the capital payments were ‘received from’ the trustee of the first settlement indirectly – no – appeal allowed and decision of the FTT set aside.
References: [2015] UKUT 550 (TCC), [2015] STI 3032, [2016] STC 816, [2015] BTC 530, [2016] WTLR 79
Links: Bailii
Jurisdiction: England and Wales

Last Update: 16 October 2020; Ref: scu.558940

Capital Gains Tax/Taxation of Chargeable Gains : Exemptions and Reliefs
References: [2015] UKFTT 478 (TC)
Links: Bailii
Jurisdiction: England and Wales

Last Update: 15 October 2020; Ref: scu.556133

References: Times 05-Jul-1994, Gazette 03-Aug-1994, Ind Summary 18-Jul-1994, [1994] STC 148, [1995] 1 AC 148
Coram: Lord Browne-Wilkinson
Ratio: 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.’
Statutes: Finance Act 1981 80, Finance Act 1965 24(11), Taxation of Chargeable Gains Act 1992 62(6)
This case cites:

• Appeal from – Marshall (Inspector of Taxes) v Kerr CA (Gazette 07-Apr-93, Ind Summary 26-Apr-93, [1993] STC 360, (1993) 67 TC 56)
  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] AC 11)
  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 ([1965] AC 694, Bailii, [1964] UKPC 2, Bailii, [1964] UKPC 45)
  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 . .

(This list may be incomplete)
This case is cited by:

• Cited – Jerome v Kelly (Her Majesty’s Inspector of Taxes) HL (House of Lords, [2004] UKHL 25, Bailii, Times 20-May-04, [2004] 21 EGCS 151, [2004] STI 1201, [2004] 2 All ER 835, [2004] 1 WLR 1409, [2004] NPC 75, [2004] WTLR 681, [2004] STC 887, 76 TC 147, [2004] BTC 176)
  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 (Times 16-Jun-97, [1997] STC 853)
  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 (Bailii, [2010] UKSC 58, [2010] WLR (D) 333, WLRD, SC Summ, SC, [2011] 1 WLR 44, [2011] BTC 13, UKSC 2009/0223, [2011] STI 133, [2011] STC 326, [2011] 1 All ER 537, Bailii Summary)
  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 (Bailii, [2008] EWHC 2731 (Ch), Times, [2008] WTLR 1833, [2008] NPC 122, [2009] 2 WLR 1257, [2009] Ch 313)
  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 . .

(This list may be incomplete)

Last Update: 07 March 2019
Ref: 83428

References: [2016] UKUT 332 (TCC)
Links: Bailii
Ratio: UTTC Capital Gains Tax – forfeited deposit on rescinded contract for purchase of land – whether contractual rights a chargeable asset – whether disposal – whether an allowable loss
Jurisdiction: England and Wales

Last Update: 12-Nov-16
Ref: 570408

References: [2016] UKUT 270 (TCC)
Links: Bailii
Ratio: CAPITAL GAINS TAX – Discovery assessment; tax avoidance scheme involving capital redemption policies; when HMRC officer discovered that assessment was insufficient; whether there can be a series of discoveries; whether the discovery became stale; TMA 1970 s 29(1); whether officer could not have been reasonably expected to be aware of the insufficiency at earlier date; attributes of the hypothetical officer; what constitutes such awareness; tests to be applied; TMA 1970 s 29(5); Appeal dismissed

Last Update: 30-Jul-16
Ref: 567357

References: [2012] UKUT 176 (TCC)
Links: Bailii
Ratio: UTTC Capital Gains Tax (CGT) – Enterprise Investment Scheme (EIS) – reinvestment relief – TCGA 1992, Sch 5B – whether subscription for eligible shares – whether amount received by subscriber in relevant period was repayment of debt within Sch 5B -nature of conditions to be satisfied for entitlement to reinvestment relief

Last Update: 20-Jun-16
Ref: 462883

References: [2016] UKUT 81 (TCC)
Links: Bailii
UTTC Ratio Capital gains tax – redemption of qualifying corporate bonds (QCBs) – scheme to avoid the application of s 116 TCGA to a conversion of non-QCBs into QCBs – s 116(1)(b) and s 132 – whether a single transaction of non-QCBs and QCBs into QCBs or two separate transactions – whether the conversion and redemption should be treated as a single composite transaction of the disposal/redemption of non-QCBs – the Ramsay principle

Last Update: 30-Apr-16
Ref: 562426

References: [2016] UKUT 165 (TCC)
Links: Bailii
UTTC Ratio CAPITAL GAINS TAX – qualifying corporate bonds (QCBs) – whether provisions in bond instruments for redenomination of sterling bonds to euros (or another currency) on adoption by the UK of the euro (or other currency) as its lawful currency prevented the bonds from being QCBs – TCGA 1992, s 117(1)(b) and s 117(2)(b)
This case cites:

• Appeal from – Trigg -v- Revenue & Customs FTTTx (Bailii, [2014] UKFTT 967 (TC))
  FTTTx CAPITAL GAINS TAX – whether a bond a QCB – bond had provision for conversion to euro if UK joined monetary union – bond a QCB . .

(This list may be incomplete)

Last Update: 28-Apr-16
Ref: 562436

References: [2015] UKUT 418 (TCC)
Links: Bailii
UTTC CAPITAL GAINS TAX – section 38(1)(b) Taxation of Chargeable Gains Act 1992 – whether expenditure incurred ‘on’ an asset and ‘reflected in the state or nature of the asset at the time of disposal’ – whether expenditure incurred ‘in establishing, preserving or defending title to, or to a right over, the asset
Statutes: Taxation of Chargeable Gains Act 1992 38(1)(b)
Last Update: 16-Oct-15 Ref: 553196

References: [2013] UKUT 129 (TCC)
Links: Bailii
UTTC Taxation of Chargeable Gains Act 1992, sections 44 and 45 – whether a valuable painting displayed in Castle Howard was ‘plant’ within section 44(1)(c) of the 1992 Act – whether the painting satisfied the test as to function – whether the painting satisfied the test as to permanence – whether the painting was not plant in the hands of the owner who disposed of it when the business in which the painting was used was not that of the owner of the painting but of a company, Castle Howard Estate Ltd – whether painting a ‘wasting asset’ within section 44 of the 1992 Act – whether owner of painting entitled to exemption from capital gains tax pursuant to section 45(1) of the 1992 Act
Statutes: Taxation of Chargeable Gains Act 1992 44 45

References: [2010] UKUT 114 (TCC), [2010] STI 2112, [2010] BTC 1513, [2010] STC 1849
Links: Bailii
Coram: Avery Jones CBE
UTTC CAPITAL GAINS TAX – exchange of shares for debentures – whether TCGA 1992 s 137 applies to each shareholder separately – no – whether Special Commissioner entitled to conclude that the main purpose was tax avoidance – yes – appeal dismissed
Statutes: Taxation of Chargeable Gains Act 1992 137

References: [2011] UKUT 306 (TCC), [2011] BTC 1800, [2011] STI 2775, [2011] STC 1920
Links: Bailii
Coram: Warren J P
UTTC CAPITAL GAINS TAX – ALLOWABLE LOSS – Tax scheme involving options – the Options entered into were interlinked – no separate commercial existence – part of an indivisible process – planned as a single continuous operation – disputed loss construed against the whole transaction involving the four Options – no allowable loss – Appeal dismissed by Tax Chamber on substantive dispute – Appeal dismissed
CAPITAL GAINS TAX – OPTIONS OVER GILTS – whether exempt under s 115 TCGA

References: [2013] UKUT 226 (TCC)
Links: Bailii
UTTC CAPITAL GAINS TAX – s 162 TCGA – roll-over relief on transfer of a business as a going concern to a company in exchange for shares – whether activities of appellant in relation to a property divided into let flats amounted to a business – whether approach of First-tier Tribunal was correct in law

References: [2013] UKUT 497 (TCC)
Links: Bailii
Coram: Lord Glennie
UTTC CGT – s.49 TCGA 1992 – contingent liability – capacity – representation made of a disposal – costs as a contingent liability.
Statutes: Taxation of Chargeable Gains Act 1992 49