Dunsby v Revenue & Customs (INCOME TAX - settlements legislation) (Rev 2) [2020] UKFTT 271 (TC) (24 June 2020)

Dunsby v Revenue & Customs (INCOME TAX - settlements legislation) (Rev 2) [2020] UKFTT 271 (TC) (24 June 2020)

The Tribunal held that the payment received by Mr Dunsby was not a dividend or distribution on the ordinary shares but was a dividend paid on the S share held by the Trust. The Trust constituted a settlement for the purposes of the settlements legislation, and Mrs Gower was the settlor. The income arising under the settlement was not treated as Mr Dunsby's income under s624 ITTOIA. The settlements legislation applied, and the amount was not taxable as a distribution under s383 ITTOIA nor under the transfer of assets abroad regime.

Citation
[2020] UKFTT 271
Parties
Appellant: Mark Dunsby; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
24 June 2020
Procedural Posture
Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal allowed
Legal Topics
Income Tax, Settlements Legislation, Tax Avoidance, Transfer of Assets Abroad, Dividend Taxation
Tax Law Income Tax Settlements Legislation Tax Avoidance Transfer of Assets Abroad Dividend Taxation

Case Brief

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Parties

Mark Dunsby

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether the payment received by Mr Dunsby is taxable as a distribution under s383 ITTOIA
  2. 2 Whether Mr Dunsby was a 'settlor' of a 'settlement' for the purposes of Chapter 5 Part 5 ITTOIA
  3. 3 Whether income arising under the settlement should be treated as income of Mr Dunsby under Chapter 5 Part 5 ITTOIA

Ratio Decidendi

The Tribunal held that the payment received by Mr Dunsby was not a dividend or distribution on the ordinary shares but was a dividend paid on the S share held by the Trust. The Trust constituted a settlement for the purposes of the settlements legislation, and Mrs Gower was the settlor. The income arising under the settlement was not treated as Mr Dunsby's income under s624 ITTOIA. The settlements legislation applied, and the amount was not taxable as a distribution under s383 ITTOIA nor under the transfer of assets abroad regime.

Court Disposition

Appeal allowed

Orders

  • The amendment to Mr Dunsby's self-assessment tax return for 2012-13 is set aside.
  • The £195,400 received by Mr Dunsby is not taxable as his income under s383 ITTOIA or the transfer of assets abroad regime.