ALEXANDER BEARD v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS [2024] UKUT 00073 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Roth,Judge Jennifer Dean |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 25 March 2024 |
Neutral Citation: [2024] UKUT 00073 (TCC) Case Number: UT/2022/000084
UPPER TRIBUNAL
(Tax and Chancery Chamber) Hearing venue: Rolls Building
7 Rolls Buildings
Fetter Lane
London
EC4A 1NL
Distributions from share premium – Jersey law – whether the distributions were “dividends”
– and whether the distributions were “dividends of a capital nature” – Section 402 ITTOIA
2005 – First Nationwide considered
Heard on: 1, 2 and 3 November 2023
Judgment date: 22 March 2024
Before
MR JUSTICE ROTH
JUDGE JENNIFER DEAN
Between
ALEXANDER BEARD Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Mr Malcolm Gammie KC, Counsel, instructed by Keystone Law
For the Respondents: Mr David Milne KC and Ms Calypso Blaj, Counsel, instructed by the
General Counsel and Solicitor to His Majesty’s Revenue and Customs
1
DECISION
INTRODUCTION
1. Mr Beard is a UK resident and a shareholder in Glencore PLC (“Glencore”), a publicly
listed company incorporated in Jersey and domiciled in Switzerland. He had acquired his
shares upon the corporate restructuring of the company in 2011, pursuant to profit
participation certificates issued to him as an employee. As a shareholder, Mr Beard
received cash distributions paid in each of the tax years 2011-12 to 2015-16. In each case,
those distributions were paid from the share premium account of the company; they were
not debited to retained earnings. In 2015, Glencore further made an in specie distribution
to its shareholders of shares in a subsidiary company, Lonmin plc (“Lonmin”), and as a
result Mr Beard received a distribution of Lonmin shares. Like the First-tier Tribunal
(“FTT”), we shall refer to all these distributions as "the Distributions”.
2. On 8 October 2019, HMRC issued a closure notice assessing Mr Beard to income tax on
the Distributions. Mr Beard appealed to the FTT on the basis that the Distributions were
distributions of a capital nature which were subject to capital gains tax and not income tax
in the UK.
3. By its decision (“the Decision”) the FTT held that the Distributions were dividends of a
non-UK resident company and that they were not dividends of a capital nature. The FTT
treated the in specie Distribution paid to Mr Beard in the 2015/16 tax year in the same way
as the Distributions paid in cash.
4. Permission to appeal was granted by the FTT on 30 June 2022 in respect of two grounds:
(i) whether the payments of share premium made by Glencore were dividends within s. 402
Income Tax (Trading and Other Income) Act 2005 (“ITTOIA 2005”); and (ii) whether the
payments were “dividends of a capital nature” within s 402 (4) ITTOIA 2005.
5. In relation to the in specie Distribution, the FTT recorded in its decision on the
application for permission to appeal:
“…it was agreed by the Appellant at the Tribunal that the in-specie dividends should be
treated in the same way as the cash dividends. No particular finding in respect of the in-
specie dividends was made.”
6. Permission to appeal was granted by the Upper Tribunal (the “UT”) on 21 October 2022
in respect of a third ground concerning the treatment of the in specie Distribution and
whether that Distribution should be taxed in the same manner as the cash Distributions.
However, as HMRC had objected to this ground as inadmissible on the basis that it was not
argued below, the permission granted was expressly without prejudice to consideration of
its admissibility.
7. Mr Beard was represented by Mr Gammie KC. HMRC were represented by Mr Milne
KC and Ms Blaj. We are grateful to Counsel for their full and helpful written and oral
submissions. We have not found it necessary to make specific reference in our decision to
all of the submissions or materials to which we were referred but we have taken all of them
into account. References below to paragraphs in the form [X] are, unless otherwise
indicated, references to paragraphs in the Decision.
THE FACTS
8. There was no dispute in relation to the material facts, which the FTT set out in detail at
[8] – [47] of the Decision and which are summarised in HMRC’s skeleton argument at paras
5 – 9 as follows:
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