William Ferguson v The Commissioners for Her Majesty's Revenue & Customs, TC 03562
| Jurisdiction | UK Non-devolved |
| Judge | Kevin POOLE |
| Judgment Date | 09 May 2014 |
| Neutral Citation | [2014] UKFTT 433 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | William Ferguson |
| Reference | TC 03562 |
| Court | First-tier Tribunal (Tax Chamber) |
[2014] UKFTT 433 (TC)
TC03562
Appeal number: TC/2012/05582
Income tax – tax avoidance scheme involving “gifts to charity” relief – s 587B ICTA – pre-
existing option arrangements, secured by charges, for securities in question to be acquired
from charity for 1% of value following charity’s receipt of them – whether Appellant had
disposed of whole of the beneficial interest in the securities to the charity – held no – effect
of composite transaction was that the disposal was, as to 99% of the value, to the
Appellant’s own family trust – additionally
, any disposal to the charity was “by way of a
bargain made at arm’s length” – s587B(1) therefore not satisfied – appeal dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
WILLIAM FERGUSON Appellant
-and-
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE & CUSTOMS Respondents
TRIBUNAL: JUDGE KEVIN POOLE
MRS SHAHWAR SADEQUE
Sitting in public at 45 Bedford Square, London on 2, 3 and 4 December 2013
David Ewart QC and Charles Bradley of counsel, instructed by NT Advisers 2009 LLP
for the Appellant
William Henderson of counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2014
2
DECISION
Introduction
1. This appeal concerns the effectiveness, for tax purposes, of a pure tax
avoidance scheme known (for reasons which were not explained to us) as the “Blue 5 Box” scheme.
2. The Appellant had earnings from employment in the tax year 2003-04 of over
£800,000, and wished to avoid paying any income tax on £500,000 of those earnings.
He (along with a number of other individuals of similar mind) decided to use a
scheme promoted to them by Mr Matthew Jenner of NT Advisers LLP (“NT”) with a 10 view to achieving this objective.
3. The essence of the scheme was to exploit the “gifts to charities” rules, under
which (in broad terms) charitable giving is encouraged by allowing individuals to
deduct from their income for tax purposes the market value of any shares or similar
assets they give to charities. On advice from Mr Jenner and/or his business, a 15 complex set of arrangements was sculpted in a way which was intended to give rise to
the relief under those rules whilst passing on 99% of the value of the assets
supposedly “given” to the charity to a family trust for the benefit of the Appellant and
his family.
The facts 20
4. The parties had agreed a statement of facts, as follows:
“1. Mr Ferguson is the rule 18 lead appellant and the facts below are
those pertaining to his case.
2. Dates are all 2004 unless otherwise stated.
3. On 23 March, Dominion Fiduciary Trust Ltd (‘Dominion’) 25 declared two trusts of £10 called respectively the Metitec JJJ Life
Interest Trust (‘the Metitec JJJ Trust’) and the Longfield JJJ Life
Interest Trust (‘the Longfield JJJ Trust’).
4. Except as mentioned below, and except that the initial Principal
Beneficiaries of them were different, the Metitec JJJ Trust and the 30 Longfield JJJ Trust were both in the same terms:
(1) the trust funds were held on trust to pay the income to the
‘Principal Beneficiary’ during his lifetime or such shorter period as
the trustees should declare, with a power to advance capital,
remainder to his issue. [The Principal Beneficiary of the Metitec 35 JJJ Trust was Bryan Craig Melville and the Principal Beneficiary
of the Longfield JJJ Trust was Peter Stuart Langton. Neither of
them was connected with Mr Ferguson.]
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