Bamberg v Revenue & Customs [2010] UKFTT 333 (TC) (14 July 2010)

Bamberg v Revenue & Customs [2010] UKFTT 333 (TC) (14 July 2010)

Circumstance D of s 703 ICTA 1988 applies to the repayment of WCL’s loan stock to the Appellant up to the amount of TTEL’s distributable reserves prior to the hive-down, as these assets represented profits available for distribution by way of dividend. The exclusion in C(2) can apply to UK companies but does not prevent the application of Circumstance D in this case. Assets lent or transferred by TTEL to WCL remain assets available for distribution by TTEL. However, profits made by WCL after the hive-down are not assets that would have been available to TTEL for distribution, so Circumstance D does not apply to repayments out of those profits.

Citation
[2010] UKFTT 333
Parties
Appellant: Marcus Bamberg; 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 dismissed in part, allowed in part
Legal Topics
Anti Avoidance, Transactions in Securities, Distribution of Profits, Repayment of Loan Stock, Interpretation of S 703 ICTA 1988
Tax Law Company Law Anti Avoidance Transactions in Securities Distribution of Profits Repayment of Loan Stock Interpretation of S 703 ICTA 1988

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Parties

Marcus Bamberg

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 the repayment of loan stock by WCL to the Appellant is caught by Circumstance D of s 703 ICTA 1988
  2. 2 Whether the exclusion in Circumstance C(2) applies to UK companies
  3. 3 Whether assets lent or transferred by TTEL to WCL remain assets available for distribution by way of dividend

Ratio Decidendi

Circumstance D of s 703 ICTA 1988 applies to the repayment of WCL’s loan stock to the Appellant up to the amount of TTEL’s distributable reserves prior to the hive-down, as these assets represented profits available for distribution by way of dividend. The exclusion in C(2) can apply to UK companies but does not prevent the application of Circumstance D in this case. Assets lent or transferred by TTEL to WCL remain assets available for distribution by TTEL. However, profits made by WCL after the hive-down are not assets that would have been available to TTEL for distribution, so Circumstance D does not apply to repayments out of those profits.

Court Disposition

Appeal dismissed in part, allowed in part

Orders

  • Appeal dismissed up to the amount of TTEL’s distributable reserves until the hive-down
  • Appeal allowed in respect of any further profits made by WCL after the hive-down