Abigail Wilmore v The Commissioners for HMRC
[2023] UKFTT 858 (TC)
John Tenconi v The Commissioners for HMRC
1 May 2024
[2024] UKUT 110 (TCC)
Upper Tribunal
Someone sold the right to get money from a company, even though they couldn't legally transfer that right fully. The tax court said this still counts as a sale for tax purposes, as they transferred the *right* to the money, even if not all of the legal paperwork was transferable. The appeal against the tax bill was unsuccessful.
Key Facts
- •Mr. Tenconi transferred his beneficial interest in distribution rights in Monarch Assurance Holdings Ltd (MAH) for £1m.
- •MAH's articles of association did not allow for the transfer of these distribution rights.
- •HMRC issued a closure notice for capital gains tax (CGT) of £175,158.59.
- •The First-tier Tribunal (FTT) upheld the closure notice, finding a disposal for CGT purposes.
- •The Upper Tribunal (UT) appeal focused solely on whether the FTT erred in concluding a disposal occurred despite the intransferability of legal title.
Legal Principles
Capital gains tax is charged on chargeable gains accruing on the disposal of assets.
s1(1) TCGA 1992
All forms of property are assets for CGT purposes, including incorporeal property. A disposal includes a part disposal where an interest or right in an asset is created.
s21 TCGA 1992
A lack of transferability does not prevent rights from being assets for CGT purposes.
Case law cited by the FTT (sections 11 and 12)
A beneficial interest in an asset can be disposed of for CGT purposes even if the legal title is not transferable; this can be effected through a declaration of trust.
Don King Productions Inc. v Warren and others [2000] Ch 291, and case law discussed in sections 34-38
The meaning of "property" for CGT purposes does not require the asset to be transferable in the strictest legal sense; the focus is on the equitable interest.
Analysis and discussion in sections 28-33
Outcomes
Appeal dismissed.
The UT found the FTT correctly concluded there was a disposal for CGT purposes. The transfer of the beneficial interest, achieved through a declaration of trust, constituted a disposal despite the intransferability of the legal title. The UT rejected Mr. Tenconi's attempts to re-argue points previously dismissed.
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