Jerome v HM Inspector of Taxes [2002] EWCA Civ 1879 (20 December 2002)

Jerome v HM Inspector of Taxes [2002] EWCA Civ 1879 (20 December 2002)

Section 27(1) of the Capital Gains Tax Act 1979 deems the time of disposal to be the date of contract, but the parties to the disposal and their interests are determined as at the contract date. Subsequent assignments of beneficial interests between contract and completion do not affect the CGT liability of the original vendors. The Special Commissioner was correct in holding that the taxpayer and Mrs Jerome were liable for CGT on the sale, and the judge's contrary interpretation was erroneous.

Citation
[2002] EWCA Civ 1879
Parties
Appellant/respondent in the Court of Appeal: Michael Jerome; Respondent/appellant in the Court of Appeal: H J Kelly (HM Inspector of Taxes)
Jurisdiction
England and Wales
Judgment Date
20 December 2002
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal allowed; Special Commissioner's decision restored
Legal Topics
Capital Gains Tax, Timing of Disposal, Trusts and Beneficial Interests, Statutory Interpretation
Tax Law Capital Gains Tax Timing of Disposal Trusts and Beneficial Interests Statutory Interpretation

Case Brief

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Parties

Michael Jerome

Appellant/respondent in the Court of Appeal

H J Kelly (HM Inspector of Taxes)

Respondent/appellant in the Court of Appeal

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether s.27(1) of the Capital Gains Tax Act 1979 deems the parties to a disposal to be those at the date of contract or at completion
  2. 2 Effect of assignment of beneficial interests between contract and completion on CGT liability
  3. 3 Application of s.46(1) to trustees and beneficiaries for CGT purposes

Ratio Decidendi

Section 27(1) of the Capital Gains Tax Act 1979 deems the time of disposal to be the date of contract, but the parties to the disposal and their interests are determined as at the contract date. Subsequent assignments of beneficial interests between contract and completion do not affect the CGT liability of the original vendors. The Special Commissioner was correct in holding that the taxpayer and Mrs Jerome were liable for CGT on the sale, and the judge's contrary interpretation was erroneous.

Court Disposition

Appeal allowed; Special Commissioner's decision restored

Orders

  • Assessment against taxpayer for CGT liability upheld
  • Appeal by Revenue allowed