Delinian Limited v The Commissioners for HMRC
[2023] EWCA Civ 1281
Commissioners for His Majesty's Revenue and Customs v Fisher and another
21 November 2023
[2023] UKSC 44
Supreme Court
A family owned a UK company that moved its business to Gibraltar to save on taxes. The UK government tried to tax the family as if they personally moved the business, even though the company did it. The Supreme Court said the government couldn't do that because the family didn't directly move the business; only the company did. The court clarified the law to prevent the government from overreaching its power to tax.
Key Facts
- •The Fisher family (Anne, Stephen, Peter, and Dianne) owned a UK-incorporated betting business, Stan James (Abingdon) Limited (SJA).
- •They transferred the telebetting operation of SJA to a Gibraltar-incorporated company, Stan James Gibraltar Limited (SJG), which they also owned.
- •HMRC assessed the Fishers to income tax under section 739 ICTA 1988 (transfer of assets abroad code - TOAA), deeming SJG's income as the Fishers' income.
- •The Fishers did not hold a majority interest in either SJA or SJG.
- •The key issue was whether the Fishers, as minority shareholders, could be considered transferors of assets under section 739, even though the legal transferor was SJA.
Legal Principles
Interpretation of 'transfer of assets' in section 739 ICTA 1988: Does the individual charged to tax have to be the transferor?
Vestey v Inland Revenue Comrs (Nos 1 and 2) [1980] AC 1148; Congreve v Inland Revenue Comrs (1946-1948) 30 TC 163
The role of section 744 ICTA 1988 (apportionment of tax) in interpreting section 739.
Finance Act 1981, section 46
Whether shareholders of a company can be treated as transferors of assets transferred by the company under section 739.
Congreve v Inland Revenue Comrs; Vestey v Inland Revenue Comrs; Inland Revenue Comrs v Pratt [1982] STC 756
The effect of the 'motive defence' (section 741 ICTA 1988) on the liability of minority shareholders.
ICTA 1988, section 741
Outcomes
The Fishers' appeals were allowed, and HMRC's appeal was dismissed.
The court held that the Fishers were not transferors of the assets under section 739 because the legal transferor was SJA, and they did not individually or collectively procure the transfer. The court emphasized the 'natural meaning' of the statutory language in section 739, limiting it to individuals who themselves transfer assets to avoid tax. The existence of section 744 did not alter this interpretation. The court also rejected HMRC's argument that minority shareholders could be treated as quasi-transferors.