Wrong kind of settlor

A settlement was created in 1991. It held the only issued shares in an offshore company which was wholly owned by the trustees. The taxpayer and his wife were the beneficiaries. In 1994 the offshore company bought some land for £725 000 with £700 000 provided by the taxpayer. The land was later sold for £2.2 million. The taxpayer did not mention the gain in his relevant personal tax return and HMRC subsequently made a discovery assessment under TMA 1970 s 36 assessing the gain under TCGA 1992 s 86.

The taxpayer's appeal to the General Commissioners was unsuccessful so he appealed to the High Court arguing that he was not within the s 68A definition of 'settlor'.

Sir Donald Rattee in the High Court said that in assessing a taxpayer's liability under TCGA 1992 ss 13 and 86 where the...