Stuart Fox v The Commissioners for His Majesty’s Revenue and Customs

For Finance Act 2003 section 45, a sub-sale satisfies section 45(1)(b) where the transferee has a contractual right to call for the conveyance. A promise to pay valid consideration is sufficient; subsequent questions about performance do not retrospectively invalidate the contract.

Clear steps by spouses to transfer money through accounts in their respective sole names may establish that the payment and asset were intended to belong beneficially to the named individual. An appellate tribunal will not interfere with a fact-sensitive finding on an implied trust where the First-tier Tribunal weighed the relevant factors and made no error of law.

Where the original purchaser and transferee are connected persons, the deemed consideration under section 45 includes the relevant consideration given under the original contract as well as the consideration for the transfer of rights.

Mr Fox appealed against the First-tier Tribunal decision of 3 December 2021, which upheld an assessment to stamp duty land tax on the purchase of a house.

He and his then wife had used a proposed sub-sale arrangement. His wife contracted to buy the property for £1,075,000 and purported to sell it to him for £10,000, with the vendors transferring the property directly to him. The arrangement failed to achieve its intended tax result because the spouses were connected persons.

Mr Fox contended that he held the property on trust for both spouses, that the second contract lacked consideration, and that the transfer was invalid. The central issue was whether the arrangements satisfied Finance Act 2003 section 45 so that Mr Fox alone was liable for SDLT on £1,085,000.

1. Appeal dismissed. The First-tier Tribunal made no error of law in upholding the SDLT assessment. Mr Fox alone was the transferee and beneficial owner on completion, and was liable for SDLT on chargeable consideration of £1,085,000.

2. The second contract was a transaction within section 45(1)(b) of the Finance Act 2003. Mr Fox paid £10,000 from an account in his sole name to an account in his wife’s sole name. That was consideration for the contract and entitled him to call for the conveyance. The Tribunal applied Re Bishop [1965] Ch 450 and Pflum v HMRC [2012] UKFTT 365 (TC) in holding that funds withdrawn by the person solely entitled to operate an account belonged to that person for this purpose.

3. A promise to pay was the contractual consideration. Even if the payment had not fully performed that promise, non-performance would not retrospectively void the contract or negate the transfer of rights. The requirements of section 45(1)(a), (b) and (c) were therefore met.

4. The First-tier Tribunal was entitled to find no implied trust. It had considered factors both for and against joint beneficial ownership. The deliberate use of sole accounts, the absence of a trust declaration in the transfer, and the parties’ intention to implement the scheme supported sole beneficial ownership by Mr Fox at completion.

5. Under section 45(3), because the spouses were connected persons, the deemed contract included both £1,075,000 paid under the original contract and £10,000 for the transfer of rights. It was unnecessary to determine the validity of the TR1, although the Tribunal saw no basis to disturb the First-tier Tribunal’s finding that it transferred the property.

• Upper Tribunal (Tax and Chancery Chamber): dismissed Mr Fox’s appeal and affirmed the First-tier Tribunal’s conclusion that he alone was liable for SDLT on £1,085,000.
• First-tier Tribunal: on 3 December 2021, dismissed the appeal against HMRC’s SDLT assessment.