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You are here: BAILII >> Databases >> United Kingdom Special Commissioners of Income Tax Decisions >> Buck v Revenue & Customs [2008] UKSPC SPC00716 (23 October 2008) URL: https://www.bailii.org/uk/cases/UKSPC/2008/SPC00716.html Cite as: [2008] UKSPC SPC716, [2008] UKSPC SPC00716, [2009] WTLR 215, [2009] STC (SCD) 6 |
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Spc00716
SETTLEMENT – Dividend waiver – Income arising under a settlement in which settlor retains interest – Arrangement – Company owned by husband and as to one share by wife – Husband waived dividend in relation to all his 9999 shares – Enhanced dividend consequently paid to wife in respect of her one share – Dividend income paid to wife – Whether waiver arrangement constituted a settlement – Yes – Whether element of bounty in arrangement – Yes – Appeal dismissed – Income and Corporation Taxes Act 1988, ss 660A(1) and 660G(1)
THE SPECIAL COMMISSIONERS
STAFFORD ROBERT BUCK Appellant
- and –
THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents
Special Commissioner: SIR STEPHEN OLIVER QC
Sitting in public in London on 26 September 2008
No representation for the Appellant
Rupert Baldry, counsel, instructed by the general counsel and solicitor for HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2008
DECISION
The relevant facts
The relevant legal provisions
"(1) Income arising under a settlement during the life of the settlor shall be treated for all purposes of the Income Tax Act as the income of the settlor and not as the income of any other person unless the income arises from property in which the settlor has no interest.
(2) Subject to the following provisions of this section, a settlor shall be regarded as having an interest in property if that property or any derived property is, or will or may become, payable to or applicable for the benefit of the settlor or his spouse in any circumstances."
…
(6) The reference in subsection (1) above to a settlement does not include an outright gift by one spouse to the other of property from which income arises, unless –
(a) the gift does not carry a right to the whole of that income, or
(b) the property given is wholly or substantially a right to income.
For this purpose the gift is not an outright gift if it is subject to conditions or if the property given or any derived property is or will become, in any circumstances whatsoever, payable to or applicable for the benefit of the donor".
"(1) In this Chapter –
"Settlement" includes any disposition, trust, covenant, agreement, arrangement, or transfer of assets, and "settlor", in relation to a settlement, means any person by whom the settlement was made.
(2) A person shall be deemed for the purposes of this Chapter to have made a settlement if he has made or entered into the settlement directly or indirectly and, in particular but without prejudice to the generality of the preceding words, if he has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement."
The contentions of the parties : a summary
"In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitle to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. …"
He contended that there had been no "arrangement". LBC had been carrying on trade as before; as a director Mr Buck had felt that it had been in LBC's interest to pay out the maximum dividends available which, as a shareholder, he had not wanted to receive. Once the dividends had been declared he had had no interest in them.
Conclusions
SIR STEPHEN OLIVER
SPECIAL COMMISSIONER
RELEASED: 23 October 2008
SC 3152/2004