INCOME TAX – Section 595 ICTA 1988 – Whether contribution to a FURBS taking the form of transfers of shares was a payment of a sum deemed by s.595(1) to be income assessable under Schedule E – held it was
THE SPECIAL COMMISSIONERS
- and -
THE COMMISSIONERS OF
HER MAJESTY'S REVENUE AND CUSTOMS
Special Commissioners : JOHN WALTERS QC
Sitting in public in London on 1 December 2005
Michael Sherry, Counsel, instructed by Haines Watts, Chartered Accountants, for the Appellant
Philip Jones, Counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents
"(1) Subject to the provisions of this Chapter [Chapter I, Part XIV, ICTA – Retirement Benefit Schemes], where, pursuant to a retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for any employee of that employer, then (whether or not the accrual of the benefits is dependent on any contingency)–
(a) the sum paid, if not otherwise chargeable to income tax as income of the employee, shall be deemed for all purposes of the Income Tax Acts to be income of that employee for that year of assessment and assessable to tax under Schedule E; and
(b) where the payment is made under such an insurance or contract as is mentioned in section 266 [life assurance premiums], relief, if not otherwise allowable, shall be given to that employee under that section in respect of the payment to the extent, if any, to which such relief would have been allowable to him if the payment had been made by him and the insurance or contract under which the payment is made had been made with him.
(4) Where the employer pays any sum as mentioned in subsection (1) above in relation to more than one employee, the sum so paid shall, for the purpose of that subsection, be apportioned among those employees by reference to the separate sums which would have had to be paid to secure the separate benefits to be provided for them respectively, and the part of the sum apportioned to each of them shall be deemed for that purpose to have been paid separately in relation to that one of them.
The Submissions for the Appellant
The Submissions for the Revenue
"… the division between money and that which can readily be used to produce money is thin. A cheque is not money but it would be absurd to suppose that payment by cheque instead of in legal tender could make any difference. And it would be almost equally absurd to suppose that a transfer of shares which can immediately be sold to produce money should not be regarded as a money perquisite."
"In this case Lord Buckmaster was of opinion, as had been at least one of the members of the Court of Appeal, that the first contention of the Crown was right, and that the words of the earlier Act had the meaning they sought to put upon them. The other noble and learned Lords thought otherwise. It would have been easy then to say that, since judicial opinion differed as to the meaning of these words, there was such an ambiguity as to justify recourse to a later Act to resolve it. But the decision of the House was unanimously to the contrary. That means that each one of us has the task of deciding what the relevant words mean. In coming to that decision he will necessarily give great weight to the opinion of others, but if at the end of the day he forms his own clear judgment and does not think that the words are "fairly and equally open to divers meanings" he is not entitled to say there is an ambiguity. For him at least there is no ambiguity and on that basis he must decide the case."
JOHN WALTERS QC
RELEASE DATE: 23 March 2006