McLaughlin v Revenue & Customs [2012] UKFTT 174 (TC) (06 March 2012)

McLaughlin v Revenue & Customs [2012] UKFTT 174 (TC) (06 March 2012)

The appointment made AG absolutely entitled as against the trustees to the loan notes as a matter of general law and for tax purposes under section 71(1) TCGA 1992. The artificiality of the arrangement did not prevent the statutory consequences. Therefore, the disposal was by AG, a non-UK domiciled individual, and not by the trustees. The appeal was allowed.

Citation
[2012] UKFTT 174 (TC)
Parties
Appellant: James Albert McLaughlin; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
06 March 2012
Procedural Posture
Tax Appeal / First Tier Tribunal (tax), Decision on Appeal Against Closure Notice
Outcome
Appeal allowed
Legal Topics
Capital Gains Tax, Taxation of Chargeable Gains, Trusts, Absolute Entitlement, Tax Avoidance Schemes
Tax Law Trust Law Capital Gains Tax Taxation of Chargeable Gains Trusts Absolute Entitlement Tax Avoidance Schemes

Case Brief

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Parties

James Albert McLaughlin

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax), Decision on Appeal Against Closure Notice

Legal Issues

  1. 1 Whether section 71(1) TCGA 1992 applied to the appointment made by the trustees to a non-UK domiciled beneficiary
  2. 2 Whether the beneficiary became absolutely entitled as against the trustees for tax purposes
  3. 3 Whether the artificiality of the arrangement negated its effect for tax purposes

Ratio Decidendi

The appointment made AG absolutely entitled as against the trustees to the loan notes as a matter of general law and for tax purposes under section 71(1) TCGA 1992. The artificiality of the arrangement did not prevent the statutory consequences. Therefore, the disposal was by AG, a non-UK domiciled individual, and not by the trustees. The appeal was allowed.

Court Disposition

Appeal allowed

Orders

  • HMRC's closure notice amended; no capital gains tax charge arises on the disposal of the loan notes by the trustees.