Philip Shirley v The Commissioners for Her Majesty's Revenue & Customs, TC 04119
| Jurisdiction | UK Non-devolved |
| Judge | Nicholas Aleksander |
| Judgment Date | 11 November 2014 |
| Neutral Citation | [2014] UKFTT 1023 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | Philip Shirley |
| Reference | TC 04119 |
| Court | First-tier Tribunal (Tax Chamber) |
[2014] UKFTT 1023 (TC)
TC04119
Appeal number: TC/2012/11057
INCOME TAX – taxation of overseas dividends received by resident beneficiary
of non-resident trust - distributions from non-UK resident companies -
interpretation of legislation rewritten as part of the Tax Law Rewrite Project –
s399 Income Tax (Trading and Other Income) Act 2005 – appeal allowed
FIRST-TIER TRIBUNAL
TAX CHAMBER
PHILIP SHIRLEY Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE NICHOLAS ALEKSANDER
MR MICHAEL SHARP FCA
Sitting in public at 45 Bedford Square, London WC1 on 1 and 2 May 2014
Michael Firth, counsel, for the Appellant
David Yates, counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2014
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DECISION
1. This is an appeal against closure notices issued by HMRC. The amount of tax at
stake is £413.23, however the issues to be determined by the Tribunal could affect a 5 number of other taxpayers who are in a similar position to the appellant, Mr Shirley.
2. The following appeals are before the Tribunal:
(1) 2005/06 – closure notice dated 23 November 2012 under paragraph 7,
Schedule 1A, Taxes Management Act 1970 (“TMA”) in respect of a claim by Mr
Shirley for tax credit of £106 10
(2) 2007/08 – closure notice dated 23 November 2012 under section 28A TMA
in respect of a claim in Mr Shirley’s self-assessment tax return for tax credit of
£209; and
(3) 2008/09 – closure notice dated 23 November 2012 under section 28A TMA
in respect of a claim in Mr Shirley’s self-assessment tax return for tax credit of 15 £1.80.
3. Income for the year 2006/7 is not before this Tribunal, as HMRC were out of time
to open an enquiry.
4. We had before us a witness statement from Mr Shirley, but Mr Shirley did not give
oral evidence. We also had a bundle of documents, including a statement of agreed facts. 20 Mr Firth represented Mr Shirley and Mr Yates represented HMRC.
5. At the conclusion of the hearing we gave directions for further written submissions
to be made by the parties.
6. References in this decision to section numbers are to sections of the Income Tax
(Trading and Other Income) Act 2005 (“ITTOIA”), unless otherwise specified. 25
The facts
7. The facts are not in dispute and we find them to be as follows:
8. Mr Shirley was at all material times tax resident in the UK.
9. Mr Shirley is the life tenant and interest in possession beneficiary of two
settlements (“the Trusts”). The Philip Shirley Trust was established by Mr Shirley’s 30 father in the early 1960s at a time when Mr Shirley’s father was resident in the Republic
of Ireland. The Philip Shirley Trust is governed by Irish law. The PES Manx Trust was
established by an unrelated party with a nominal sum, but was later funded by an
appointment from a settlement set up by Mr Shirley’s mother in the early 1960s, at a time
3
when she was resident in Ireland. The PES Manx Trust is governed by Manx law. The
trustees of the Trusts were resident and the settlements were managed in Ireland, until Mr
Shirley’s parents moved to the Isle of Man in 1977. At all times the trustees of the Trusts
have been resident outside the UK, and the Trusts have been managed outside the UK.
10. Mr Shirley is the life tenant of the Trusts, and the dividends and other income of the 5 Trusts have always been paid to him as life tenant.
11. The appeal is in respect of dividends arising on shares owned by the Trusts in
companies resident in the following countries:
(a) Bermuda
(b) Canada 10
(c) France
(d) Germany
(e) Hong Kong
(f) Ireland
(g) Switzerland; and 15
(h) the USA
12. Historically, the shares were registered in the name of a nominee company in the
Isle of Man and the dividends were not remitted to the UK. However, this was
cumbersome and expensive, and the trustees decided to transfer the shares to a nominee
company in the UK during the course of 2005/06. 2005/06 was a transitional year, and 20 not all of the shares were transferred from the Manx nominee to the UK nominee in this
year.
13. The dividend income that is the subject of this appeal has been distributed by the
Trusts to Mr Shirley as the life tenant of the Trusts.
14. As a UK resident, Mr Shirley is chargeable to income tax on the dividends to the 25 extent the dividends are remitted to the UK.
15. The issue before the Tribunal is whether Mr Shirley is to be treated as if he had
paid tax on the distributions pursuant to s399.
16. This question arises in respect of the years
(a) 2005/6 30
(b) 2007/8; and
(c) 2008/9
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