TC09557 - [2025] UKFTT 00750 (TC)

Mrs Cook’s submissions for HMRC focused on a different aspect of s 94(2)(a), namely, whether the transfer of value was attributable to a payment or transfer of assets to a person which fell to be taken into account in computing that person’s liability to income tax or corporation tax (emphasis added).

Mrs Cook submitted that the scheme transactions need to be viewed realistically, and that on this view, the transfer of value was from the Company to the Trustee. The value received by the Trustee was the £100 transferred to it by the Company, and the right to be paid £740,100 by Ms Tonkin in ten years’ time. These amounts do not fall to be taken into account in computing any profit or gains of the Trustee. As such, according to Mrs Cook, it is not Ms Tonkin’s computation of any profit or gains that needs to be considered in the context of section 94(2)(a). Instead, the relevant consideration is that neither the £100 nor the promise to pay £740,100 were taken into account in computing the Trustee’s profits or gains for the purposes of income tax or corporation tax.

Mrs Cook also pointed out that Ms Tonkin believed the money belonged to the Trust, and that she (Ms Tonkin) could borrow money from the Trust. Mrs Cook accepted that Ms Tonkin was liable to income tax on that money, but submitted that this was not determinative of the issue. According to Mrs Cook, Ms Tonkin did not simply take the income but set up a structure that included the Trust, and so the Tribunal should look at the transactions as a whole.

Mr Sykes, in response to these submissions, argued that inheritance tax is not generally concerned with identifying the recipient of a transfer of value, but instead operates as a charge where there is a loss to an estate. In this case the loss to the Company’s estate was the gold (or its monetary value), and this amount had been subject to income tax in the hands of Ms Tonkin. This, submitted Mr Sykes, was consistent with HMRC’s case in relation to PAYE: he made reference in this context to HMRC’s letter of 29 June 2017, in which HMRC expressed the view that the scheme resulted in the payment of earnings to the employees (ie Ms Tonkin) from the employer in the form of money or money’s worth, in the form of gold.