Case Law

In Vestey’s Executors v IRC 31 TC 1 the word “wife” was held not to include “widow”.

Arising from Vestey V IRC 1980 STC 10 an individual could transfer assets abroad without becoming liable to tax under section 806 provided neither that individual nor his or her spouse could potentially benefit from the income attributable to that transfer.

In CIR v Shroder 1983 STC 480 it was held that an individual who had power to appoint trustees could not control the application of the income.

In Madigan & Madigan v AG 1984 ITR 127 the taxpayer argued that it was unconstitutional that his eligibility for relief from Residential Property Tax should depend on the income of the household over which he had no control. The Supreme Court held in reality the members of the household should contribute to the running of the family home.

Two brothers transferred assets to different non resident companies in exchange for shares and debentures in each of those companies. Each brother then executed a deed of gift of his shares and debentures to the other brother. Both brothers were held liable. Beatty’s Exors v IRC TC 574

The Inland Revenue sought to tax three individuals who were both directors and shareholders of a company which had made a transfer of assets. The individuals between them only formed a minority of the board of directors and of the company’s shareholders. It was held that it was the company and not the individuals that had made the transfer. IRC v Pratt 1982 STC 756

The power of trustees to transfer trust property could trigger “power to enjoy” provisions. IRC v Botnar 1999 STC 711

The UK case Herdman v IRC 1969 45 TC 394 dealt with the meaning of “associated operations”. Under the UK equivalent of the Irish pre-2007 rules, the case established that it was only those associated operations which have to be taken into account upfront for the purposes of establishing a potential liability under section 806 TCA 1997 which were relevant.

The issue of transferring assets abroad was brought to attention in Willoughby v IRC 1997 STC 995. In this case, the taxpayer succeeded in proving that his motive for investing in an Isle of Man personal portfolio investment bond was not tax avoidance.

Under transfer of assets provisions, Revenue cannot take any amount of income into account more than once. R v Dimsey and Allen 1999 STC 846

In Carvill v IRC 2002 STC 1167 consideration was given as to whether the UK test in section 741 TA 1988 (equivalent to section 806(8) TCA 1997) was subjective or objective in nature.

An individual who transferred investments to a foreign company thereby increasing the value of the debt the company owed to him was held to have the power to enjoy the company’s income. Ramsden v IRC 1957 TC 619

In Latilla v IRC 1943 TC 107 an individual who transferred assets to a foreign company in return for shares and non interest bearing debentures was held to have the power to enjoy the company’s income where company profits were used to purchase the debenture.

An individual who had the power to appoint and remove directors held the power to enjoy the company’s income. Lee v IRC 1941 TC 207

In Revenue Commissioners v ORMG 1982 ITR 28 there is a view that apportionment is not possible even in the case of joint incomes.

The question of when income arises should be decided by reference to normal Irish tax law principles. Chetwode v IRC 1977 STC 64

The UK case of McGuckian v CIR 1997 STC 908 established the principle that the equivalent UK section can apply even if the effect of the transfer of assets abroad would not have been successful in avoiding UK tax.