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Chapter TSEM4110

Document Cited in Related
Vincent
Published date02 May 2016
Record NumberTSEM4110
CourtHM Revenue & Customs

The potential scope of the ‘settlement’ is extremely wide. Given the breadth of the unrestricted term the Courts have concluded that it is appropriate to impose some limitation on its scope. A purely commercial transaction at arms length is outside the meaning of ‘settlement’.

Settlement must include an element of bounty, as decided in the tax case of CIR v Plummer (54 TC 1). Bounty is the provision of value without any corresponding quid pro quo, usually a gift or a transfer at less than full value.

Where a settlor enters into an arrangement that he or she would not have entered into with someone with whom the individual was acting at arm’s length, the arrangement is susceptible to the legislation. This conclusion is based on the decision in Jones v Garnett (78 TC 597).

For the purposes of the settlements legislation, ‘trust’ does not include a trust set up under a Will or...

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