Unicomer (St Vincent) Ltd v Appeal Commissioners and another (St Vincent and the Grenadines)

For the anti-avoidance provisions in the Income Tax Act, the Revenue must identify a tax-reducing transaction and hold a subjectively genuine opinion, supported by objectively reasonable grounds, that the transaction was carried out in an abnormal manner. Rejection of a sham or conduit case does not prevent an alternative assessment based on commercial abnormality. Where factual and quantum issues remain, the matter should be remitted to the specialist Appeal Commissioners. For income accrual, section 9(1)(b) applies where a commercially recognised non-cash accounting system is regularly followed. Income accrues when credited, or when it should have been credited, in the books of account. Expert evidence is not invariably required.

Unicomer (St Vincent) Ltd, a hire-purchase retailer, deducted credit protection insurance premiums and was assessed to withholding tax on the same sums. The Revenue treated the arrangements as involving payments to a related reinsurer and invoked sections 23 and 66 of the Income Tax Act.

The Appeal Commissioners dismissed the appeal. Byer J confirmed the assessments on different grounds, finding that the insurance arrangements were genuine but commercially abnormal. The Eastern Caribbean Court of Appeal dismissed the appeal on 17 April 2024. A further issue concerned whether hire-purchase income accrued when contracts were made or only when instalments were received. The central questions were whether issues 1 and 2 should be quashed or remitted, and whether section 9(1)(b) governed issue 3.

1. Issues 1 and 2. The Revenue conceded that the appeal should succeed in relation to the deduction and withholding-tax assessments, but the Board declined to quash them outright. The findings that United was genuine and was not a sham or mere conduit did not eliminate the possibility of an alternative assessment under section 23.
2. For the relevant section 23(1)(a) route, there must be a transaction having the effect of reducing tax and a Comptroller’s opinion that it was carried out by means or in a manner not normally employed for a transaction of that nature. The opinion must be subjectively held and have an objectively reasonable basis. It need not be the only opinion available, and courts should ordinarily be slow to interfere with the Revenue’s expert assessment.
3. The financial statements classified the CPI payments as moving directly to Canterbury, the related reinsurer. The explanation that this was an accounting error was rejected and was unsupported by direct payment evidence. Payment of premiums to a reinsurer, or financial reporting which indicates that this was the true substance of the transaction, may demonstrate an abnormal manner of arranging insurance alongside hire purchase. The unusually high proportion of premiums ultimately paid to Canterbury was an additional relevant feature, even without comparative evidence of reinsurance profits.
4. The assessments were therefore not quashed. The matter was remitted to the Appeal Commissioners, whose specialist powers under sections 104 and 105 of the Income Tax Act made them the appropriate body to determine whether, and to what extent, the alternative basis could sustain the assessments. The High Court’s function under section 106 was limited to review for error of law.
5. Issue 3. Section 9(1)(b) does not require prevailing commercial accounting standards to determine taxable profits. Where the Revenue is satisfied that a commercially recognised accounting system other than cash accounting is regularly followed, income accrues when credited, or when it should have been credited, in the books of account. Expert evidence from the Revenue is not essential where the taxpayer’s professional accountants identify a recognised non-cash revenue-recognition system. The evidence showed that the full hire-purchase price was credited when each agreement was entered into. The appeal on issue 3 was dismissed.
6. The Board expressed serious doubts about any legal distinction between books of account and audited financial statements in this context, but it was unnecessary to resolve that question.

1. Privy Council [2026] UKPC 24: allowed the appeal on issues 1 and 2 and remitted the assessments to the Appeal Commissioners; dismissed the appeal on issue 3.
2. Eastern Caribbean Court of Appeal: dismissed the appeal on all grounds on 17 April 2024.
3. High Court of Saint Vincent and the Grenadines: Byer J confirmed the assessments on 29 April 2021, although on grounds different from those relied on by the Revenue.
4. Appeal Commissioners: dismissed the taxpayer’s appeal on 29 November 2018.