CheckLists.Tax (beta)
B6. Purchase
INCOME TAX
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- Joint purchase where shares do not correspond to contribution: settlement
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- If A and B buy an asset together and their ownership shares do not reflect their contributions either:
(1) There is constructive/resulting trust if no gift was intended; or
(2) There was a gift, and thus a settlement.
- Patmore: "[86] ... If Mrs Patmore had intended to give up her entitlement to shares in the company in favour of her husband and take no recompense, such that the issue of the B shares and the later dividends paid to her by the company, but at Mr Patmore’s direction, really were gratuitous, then Mrs Patmore herself would have created a settlement on her husband. She would have settled half of the 85 shares purchased on him."
- On the facts, there was a constructive trust.
- Query whether outright gift between spouses exemption applies to the facts.
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Legislation:
Cases:
Patmore v. HMRC [2010] UKFTT 334 (TC), Judge Mosedale;
HMRC manuals:
Commentary:
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Settlements code
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Deduction: partnership issues
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Legislation:
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Expenses incurred by partner in pursuing partnership trade deductible
"[50] Putting this another way, I agree with Mr Rivett’s distinction between expenses which a partner incurs in its capacity as an investor in a partnership and expenses which that partner incurs in pursuing the trading purposes of that partnership. Expenses falling within the second category are the ones to which Lord Justice Henderson was referring in his judgment in Vaines. In my view, his judgment has no relevance to expenses falling within the first category." (Shiner v. HMRC [2020] UKFTT 295 (TC), Judge Beare)
Legislation:
Cases: Vaines v. HMRC [2018] EWCA Civ 45;
HMRC manuals:
Commentary:
See also:
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Capital v. income
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Repair is revenue, replacement is capital
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Legislation:
Cases:
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Expenses incurred by partner in pursuing partnership trade deductible
"[50] Putting this another way, I agree with Mr Rivett’s distinction between expenses which a partner incurs in its capacity as an investor in a partnership and expenses which that partner incurs in pursuing the trading purposes of that partnership. Expenses falling within the second category are the ones to which Lord Justice Henderson was referring in his judgment in Vaines. In my view, his judgment has no relevance to expenses falling within the first category." (Shiner v. HMRC [2020] UKFTT 295 (TC), Judge Beare)
Legislation:
Cases: Vaines v. HMRC [2018] EWCA Civ 45;
HMRC manuals:
Commentary:
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Expenses of managing an investment business by a company​
Expenses incurred in deciding whether to sell or acquire asset are expenses of managing of an investment business
- Same capital v. income test as in general tax law (Centrica §59)
- Costs relating to acquisition of investment are capital (Centrica, §§95 - 107)
Legislation: CTA 2009, s.1219;
Cases: HMRC v. Centrica Overseas Holdings Limited [2022] EWCA Civ 1520, Singh, Newey, Henderson LJJJ;
HMRC manuals:
Commentary:
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Contaminated land remediation relief​
Conditions
- Acquired land in the UK
- For the purposes of trade
- At the time of the acquisition all or part of the land was in a contaminated state
- The land was not contaminated wholly or partly as a result of anything done or omitted to be done by T or a connected person.
- whole expenditure disallowed if wholly or partly due to things done by T, even if that may operate harshly (NGN §§40 - 44).
- T incurred qualifying land remediation expenditure in respect of the land
- expenditure in relation to a chattel may be in relation to the land as long as the object and focus is still the land rather than the chattel (which would not include improving and maintaining a pipeline used for trading purposes) (NGN, §§47 - 48).
- the expenditure was deductible
Legislation:
Cases: Northern Gas Networks Limited v. HMRC [2021] UKUT 157 (TCC);
HMRC manuals:
Commentary:
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