Ebsworth v Revenue & Customs (Rev 1) [2009] UKFTT 199 (TC) (29 July 2009)

Ebsworth v Revenue & Customs (Rev 1) [2009] UKFTT 199 (TC) (29 July 2009)

The transactions were not undertaken for tax avoidance purposes; the main purpose was to achieve a clean commercial and personal break between Mr. and Mrs. Ebsworth. The formation and share transfer in BSAS2 were not essential to the liquidation or to any alleged tax advantage. The escape clause in section 703 ICTA 1988 applies because the transactions were bona fide commercial transactions and not undertaken with the main object of obtaining a tax advantage. Accordingly, section 703 does not apply and the appeal is allowed.

Citation
[2009] UKFTT 199
Parties
Appellant: Mr. A J Ebsworth; Respondents: The Commissioners for Her Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
29 July 2009
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax), Substantive Decision
Outcome
Appeal allowed
Legal Topics
Income Tax, Corporation Tax, Anti Avoidance, Transactions in Securities, Section 703 ICTA 1988, Capital Vs Income Treatment, Liquidation, Tax Advantage, Escape Clause
Tax Law Income Tax Corporation Tax Anti Avoidance Transactions in Securities Section 703 ICTA 1988 Capital Vs Income Treatment Liquidation +2 more

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Parties

Mr. A J Ebsworth

Appellant

The Commissioners for Her Majesty's Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the transactions were undertaken for tax avoidance purposes
  2. 2 Whether the conditions for the application of section 703 ICTA 1988 are fulfilled
  3. 3 Whether there was a tax advantage in consequence of a transaction in securities or the combination of liquidation and a transaction in securities

Ratio Decidendi

The transactions were not undertaken for tax avoidance purposes; the main purpose was to achieve a clean commercial and personal break between Mr. and Mrs. Ebsworth. The formation and share transfer in BSAS2 were not essential to the liquidation or to any alleged tax advantage. The escape clause in section 703 ICTA 1988 applies because the transactions were bona fide commercial transactions and not undertaken with the main object of obtaining a tax advantage. Accordingly, section 703 does not apply and the appeal is allowed.

Court Disposition

Appeal allowed

Orders

  • Section 703 notice set aside
  • No adjustment to Appellant's tax liability under section 703 ICTA 1988