Patmore v Revenue & Customs [2010] UKFTT 334 (TC) (14 July 2010)

Patmore v Revenue & Customs [2010] UKFTT 334 (TC) (14 July 2010)

There was no settlement within s660A in respect of the B shares or dividends up to the proportion of Mrs Patmore's beneficial entitlement (42.5%), as she contributed equally to the purchase and was entitled to a commensurate share of dividends; any dividends paid to her in excess of this entitlement would constitute a settlement taxable on Mr Patmore.

Citation
[2010] UKFTT 334
Parties
Appellant: David Thomas Patmore; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
14 July 2010
Procedural Posture
Tax Appeal / First Tier Tribunal (tax), Substantive Decision
Outcome
Appeal allowed in part; assessments to be reduced.
Legal Topics
Income Tax, Corporation Tax, Anti Avoidance, Settlements Under S660 a ICTA 1988, Constructive Trusts, Dividend Allocation, Spousal Transactions
Tax Law Income Tax Corporation Tax Anti Avoidance Settlements Under S660 a ICTA 1988 Constructive Trusts Dividend Allocation Spousal Transactions

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Parties

David Thomas Patmore

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax), Substantive Decision

Legal Issues

  1. 1 Whether dividends paid to Mrs Patmore were income arising under a settlement within s660A ICTA 1988 and thus taxable on Mr Patmore
  2. 2 Whether the arrangement between Mr and Mrs Patmore involved an element of bounty or was a commercial transaction
  3. 3 Whether the B shares and/or dividends constituted a settlement

Ratio Decidendi

There was no settlement within s660A in respect of the B shares or dividends up to the proportion of Mrs Patmore's beneficial entitlement (42.5%), as she contributed equally to the purchase and was entitled to a commensurate share of dividends; any dividends paid to her in excess of this entitlement would constitute a settlement taxable on Mr Patmore.

Court Disposition

Appeal allowed in part; assessments to be reduced.

Orders

  • Tax assessments for 1999/00, 2000/01, 2001/02, and 2002/03 to be reduced to reflect Mrs Patmore's entitlement to 42.5% of dividends; parties to agree calculations.
  • HMRC to consider equitable liability before enforcing assessments without credit for overpaid tax in later year.