Gould v Revenue And Customs Gould v Revenue And Customs (Interim dividend - payment to shareholders on different dates - whether later dividend due and payable when first dividend paid - no) [2022] UKFTT 431 (TC) (01 November 2022)

Gould v Revenue And Customs Gould v Revenue And Customs (Interim dividend - payment to shareholders on different dates - whether later dividend due and payable when first dividend paid - no) [2022] UKFTT 431 (TC) (01 November 2022)

The Tribunal held that payment of an interim dividend to one shareholder does not make it due and payable to another shareholder for tax purposes unless the company's constitution or agreement provides otherwise. Article 104 does not create a debt in these circumstances, and the Doherty case was not followed. Even if a debt had arisen, the shareholders had agreed (under the Duomatic principle) to vary their rights and/or the appellant had waived his right to simultaneous payment. Therefore, the dividend was only due and payable to the appellant when actually paid to him.

Citation
[2022] UKFTT 431
Parties
Appellant: Peter Gould; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
01 November 2022
Procedural Posture
Tax Appeal / First Tier Tribunal (tax) Judgment
Outcome
Appeal allowed
Legal Topics
Interim Dividends, Taxation of Dividends, Shareholder Rights, Company Articles of Association, Duomatic Principle, Waiver of Rights, Unfair Prejudice
Tax Law Company Law Interim Dividends Taxation of Dividends Shareholder Rights Company Articles of Association Duomatic Principle Waiver of Rights +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 19 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

Peter Gould

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax) Judgment

Legal Issues

  1. 1 Whether an interim dividend paid to shareholders on different dates is due and payable to all shareholders when first paid to any shareholder for tax purposes
  2. 2 Whether payment to one shareholder creates an enforceable debt to the other under company law and articles
  3. 3 Whether the Duomatic principle or waiver applies to vary or waive rights to simultaneous payment

Ratio Decidendi

The Tribunal held that payment of an interim dividend to one shareholder does not make it due and payable to another shareholder for tax purposes unless the company's constitution or agreement provides otherwise. Article 104 does not create a debt in these circumstances, and the Doherty case was not followed. Even if a debt had arisen, the shareholders had agreed (under the Duomatic principle) to vary their rights and/or the appellant had waived his right to simultaneous payment. Therefore, the dividend was only due and payable to the appellant when actually paid to him.

Court Disposition

Appeal allowed

Orders

  • The closure notices issued by HMRC are set aside.
  • The dividend is to be treated as paid to the appellant on the actual payment date for tax purposes.