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 principle, the intermediate steps (creation of Irish trusts, put options, sale to Irish Trustees) were disregarded. The disposal was treated as a direct sale by the Scottish Trustees to Merrill Lynch, and the resulting capital gain was chargeable to tax under the usual rules. The statutory provisions relied on by the appellants (including s144ZA TCGA 1992) did not prevent the application of the Ramsay approach in these circumstances.

Citation
[2016] UKFTT 250 (TC)
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 at First Tier Tribunal
Outcome
Appeals dismissed
Legal Topics
Capital Gains Tax, Tax Avoidance, Trusts, Composite Transactions, Put Options
Tax Law Capital Gains Tax Tax Avoidance Trusts Composite Transactions Put Options

Case Brief

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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 at First Tier Tribunal

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 should be treated as a single composite transaction for CGT purposes.

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 principle, the intermediate steps (creation of Irish trusts, put options, sale to Irish Trustees) were disregarded. The disposal was treated as a direct sale by the Scottish Trustees to Merrill Lynch, and the resulting capital gain was chargeable to tax under the usual rules. The statutory provisions relied on by the appellants (including s144ZA TCGA 1992) did not prevent the application of the Ramsay approach in these circumstances.

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.