Sharon Clipperton & Anor. v The Commissioners for HMRC

Sharon Clipperton & Anor. v The Commissioners for HMRC

The sums received by the appellants were taxable as distributions made by Winn Yorkshire to them under a purposive construction of the distribution code, as the arrangements were a composite scheme to deliver value to shareholders. The settlements legislation did not override the distribution charge. If the settlements code applied, the appellants were settlors as they indirectly provided property for the settlement and the element of bounty test was satisfied. The multiple settlor provisions did not prevent attribution of income to the appellants.

Parties
Appellant/respondent in Cross Appeal: Sharon Clipperton; Appellant/respondent in Cross Appeal: Steven Lloyd; Respondent/appellant in Cross Appeal: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
20 December 2022
Procedural Posture
Tax Appeal / Upper Tribunal (tax and Chancery Chamber) Appeal and Cross Appeal
Outcome
Appellants' appeal dismissed; HMRC's cross-appeal allowed in part
Legal Topics
Income Tax, Dividend Avoidance Schemes, Settlements Legislation, Distributions, Tax Avoidance, Trusts
Tax Law Income Tax Dividend Avoidance Schemes Settlements Legislation Distributions Tax Avoidance Trusts

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 16 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

Sharon Clipperton

Appellant/respondent in Cross Appeal

Steven Lloyd

Appellant/respondent in Cross Appeal

The Commissioners for His Majesty’s Revenue and Customs

Respondent/appellant in Cross Appeal

Procedural Posture

Tax Appeal / Upper Tribunal (tax and Chancery Chamber) Appeal and Cross Appeal

Legal Issues

  1. 1 Whether sums received by the taxpayers under a dividend avoidance scheme involving a trust were taxable as distributions or under the settlements legislation
  2. 2 Whether the settlements legislation overrode any charge under the distribution code
  3. 3 Whether the taxpayers were settlors under the settlements legislation

Ratio Decidendi

The sums received by the appellants were taxable as distributions made by Winn Yorkshire to them under a purposive construction of the distribution code, as the arrangements were a composite scheme to deliver value to shareholders. The settlements legislation did not override the distribution charge. If the settlements code applied, the appellants were settlors as they indirectly provided property for the settlement and the element of bounty test was satisfied. The multiple settlor provisions did not prevent attribution of income to the appellants.

Court Disposition

Appellants' appeal dismissed; HMRC's cross-appeal allowed in part

Orders

  • The appellants' appeal against the FTT's decision that the B share dividend was taxable as a distribution made by Winn Yorkshire to the appellants is dismissed.
  • The appellants' appeal against the FTT's decision that the relevant income did not fall to be taxed under the settlements code is dismissed.