Commissioners for His Majesty's Revenue and Customs v Fisher and another

The transfer of assets abroad charge under section 739 of the Income and Corporation Taxes Act 1988 applies only to an ordinarily resident individual who transferred the assets generating the relevant overseas income. Section 744, which prevents duplication and permits apportionment, does not extend the charge to non-transferors.

A shareholder does not procure, and is not a quasi-transferor of, a company's transfer merely through control, voting, directorship or participation in the corporate decision. This remains so where the shareholders and directors are the same people. A person who uses an agent or otherwise genuinely procures a transfer may fall within section 739, but the precise limits of that principle remain open.

A United Kingdom company, SJA, sold its telebetting business at market value to a Gibraltar company, SJG. Members of the Fisher family held shares and directorships in both companies, but none held a majority interest individually. HMRC assessed three family members under section 739 of the Income and Corporation Taxes Act 1988, treating portions of SJG's income as their income.

The First-tier Tribunal treated the family members as transferors. The Upper Tribunal reversed that conclusion. By [2021] EWCA Civ 1438, the Court of Appeal restored the assessments against Stephen and Peter Fisher, but held Anne Fisher outside the charge because she had taken no active part in the decision.

The issues were whether section 739 applies only to an individual who transferred the assets and, if so, whether shareholders or directors may be treated as transferors of assets legally transferred by their company.

1. The taxpayers' appeals were allowed and HMRC's appeal was dismissed. Lady Rose, with whom Lord Reed, Lord Hodge, Lord Sales and Lord Stephens agreed, held that none of the Fishers was, singly or collectively, a transferor of the business sold by SJA to SJG. They therefore fell outside section 739 of the Income and Corporation Taxes Act 1988.

2. Section 739 is confined to an ordinarily resident individual who transfers the assets generating the overseas income. The expression “such an individual” in subsection (2) imports from subsection (1) more than residence: it identifies an individual seeking to avoid income tax by means of the transfer. This is the natural meaning established in Vestey. The severity of a charge capable of taxing the whole overseas income, even when the individual receives little or none of it, reinforces that construction: paras 55–62.

3. Section 744 does not expand section 739 to non-transferors. Although it prevents multiple taxation of the same income and permits a just and reasonable apportionment, section 740 separately and less severely taxes a non-transferor who actually receives a benefit. HMRC's broader construction would create an unexplained overlap and could leave the choice of charge to administrative discretion. Parliament filled the gap identified in Vestey through section 740, not by broadening section 739: paras 59–61.

4. A company's shareholders are not quasi-transferors of assets transferred by the company, even where they control it or are also its directors. Neither ownership, voting support, collective control nor involvement in the corporate decision makes the company's transfer their transfer. The absence from section 739 of the detailed control and close-company definitions used elsewhere in the tax code strongly indicates that Parliament did not intend that result. HMRC's proposed approach also lacked a workable boundary for minority shareholders and was incompatible with legal certainty: paras 72–86.

5. The court left open whether a person who is neither owner nor legal transferor may nevertheless fall within section 739 by genuinely procuring the transfer or using an agent. Interposition of a company as a device, or facts engaging a recognised exception to separate corporate personality, might produce a different result. SJA, however, was a bona fide company which had traded for many years: paras 85–87.

1. United Kingdom Supreme Court: By [2023] UKSC 44, unanimously allowed Stephen and Peter Fisher's appeals and dismissed HMRC's appeal concerning Anne Fisher.
2. Court of Appeal: By a majority in [2021] EWCA Civ 1438, [2022] 1 WLR 651, held Stephen and Peter Fisher liable under section 739 of the Income and Corporation Taxes Act 1988, but dismissed HMRC's appeal concerning Anne Fisher. Phillips LJ dissented and would have dismissed HMRC's appeal concerning all three taxpayers.
3. Upper Tribunal (Tax and Chancery Chamber): In [2020] UKUT 62 (TCC), [2020] STC 1218, held that SJA, rather than its shareholders or directors, made the transfer and allowed the taxpayers' appeals.
4. Court of Justice of the European Union: In Case C-192/16, held by reasoned order that the United Kingdom and Gibraltar comprised a single member state for the relevant freedoms.
5. First-tier Tribunal (Tax Chamber): In [2014] UKFTT 804 (TC), [2014] SFTD 1341, treated the taxpayers as transferors, but allowed some appeals on other grounds.