Morrison 2002 Maintenance Trust, The Trustees of & Ors v Revenue and Customs (CAPITAL GAINS TAX/TAXATION OF CHARGEABLE GAINS : Disposal) [2016] UKFTT 250 (TC) (13 April 2016)

Morrison 2002 Maintenance Trust, The Trustees of & Ors v Revenue and Customs (CAPITAL GAINS TAX/TAXATION OF CHARGEABLE GAINS : Disposal) [2016] UKFTT 250 (TC) (13 April 2016)

The tribunal held that the scheme was a pre-ordained, composite transaction with no commercial purpose other than tax avoidance. Applying the Ramsay approach, the intermediate steps (transfer to Irish Trustees and their subsequent sale) were disregarded. The disposal was treated as a direct sale by the Scottish Trustees to Merrill Lynch at market value, making the gains chargeable to capital gains tax under the usual rules.

Citation
[2016] UKFTT 250
Parties
Appellants: The Trustees of the Morrison 2002 Maintenance Trust, The Trustees of Sir Fraser Morrison’s 1989 Trust, The Trustees of Sir Fraser Morrison’s 1995 Trust, and Sir Fraser Morrison; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
13 April 2016
Procedural Posture
Appeal (first Tier Tribunal Tax) / Final Judgment
Outcome
Appeals dismissed
Legal Topics
Capital Gains Tax, Tax Avoidance Schemes, Trust Law, Disposal of Assets, Composite Transactions
Tax Law Capital Gains Tax Tax Avoidance Schemes Trust Law Disposal of Assets Composite Transactions

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Parties

The Trustees of the Morrison 2002 Maintenance Trust, The Trustees of Sir Fraser Morrison’s 1989 Trust, The Trustees of Sir Fraser Morrison’s 1995 Trust, and Sir Fraser Morrison

Appellants

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Appeal (first Tier Tribunal Tax) / Final Judgment

Legal Issues

  1. 1 Whether a tax avoidance scheme involving Scottish and Irish trusts, put options, and sale of shares avoids liability to capital gains tax or is to be treated as a single composite transaction taxable on market value under the Ramsay principle.

Ratio Decidendi

The tribunal held that the scheme was a pre-ordained, composite transaction with no commercial purpose other than tax avoidance. Applying the Ramsay approach, the intermediate steps (transfer to Irish Trustees and their subsequent sale) were disregarded. The disposal was treated as a direct sale by the Scottish Trustees to Merrill Lynch at market value, making the gains chargeable to capital gains tax under the usual rules.

Court Disposition

Appeals dismissed

Orders

  • The appeals of the Trustees of the Morrison 2002 Maintenance Trust, the Trustees of Sir Fraser Morrison’s 1989 Trust, the Trustees of Sir Fraser Morrison’s 1995 Trust, and Sir Fraser Morrison are dismissed.