Marshall (Inspector of Taxes) v Kerr

This appeal concerned the charge to capital gains tax in circumstances where a deceased person was not resident in the United Kingdom, a share of the residuary estate accrued to his United Kingdom resident daughter, and a trust was effected by an instrument of variation within two years of death. The statutory issues arose under the Finance Act 1965 (sections 24(7), 24(11) and 42) and the Finance Act 1981 (sections 80–85) about whether capital payments made by the trustee were chargeable because the daughter should be treated as the settlor or, alternatively, because the deceased was the settlor.

The judgment as provided does not state the court's final determination or the detailed reasoning on the competing characterisations of settlor status and the resulting tax consequences.

Background and facts:

• A deceased person, not resident in the United Kingdom, left a residuary estate from which a share accrued to his daughter who was resident in the United Kingdom.
• An instrument of variation was executed within two years of the death producing a trust, and the trustee (not resident in the United Kingdom) made capital payments to the daughter.

Nature of the proceedings: An appeal concerning the proper charge to capital gains tax of the payments made under the trust and whether chargeability followed from treating the daughter as the settlor of the trust or from treating the deceased as the settlor.

Issues framed:

• Whether, for the purposes of the relevant provisions of the Finance Act 1965 and the Finance Act 1981, the daughter was to be treated as the settlor so that the payments were chargeable to capital gains tax;
• Alternatively, whether the deceased should be treated as the settlor and the tax consequences of that characterisation.

Statutory provisions in issue: Finance Act 1965, sections 24(7), 24(11) and 42; Finance Act 1981, sections 80–85.

Procedural posture and reasoning: The provided text does not include the lower courts' decisions, the appellate history, nor the House of Lords' detailed reasoning or ultimate statutory construction conclusions. Consequently the court's analysis and conclusion on the statutory questions are not stated in the judgment.