Further into the Underwood

 KEY POINTS

• The judge's painful contradiction in Underwood v CRC.
• Possible impact for bed and breakfast transactions.
• Was there a sub-sale?
• A further appeal might help clarify the nature of a disposal.

In a previous article Mystery of the Underwood I examined the implications of the decisions of the Special Commissioners and the High Court in Underwood v CRC for understanding the nature of a disposal for capital gains tax purposes.

Both the Special Commissioners and Mr Justice Briggs having proceeded on the basis that a disposal for capital gains tax purposes involves a transfer of beneficial ownership and that the formation of a contract cannot itself constitute a disposal the question became whether the transactions which took place on 30 November 1994 resulted in the beneficial ownership in the property passing to Rackham Ltd.

Their...