Right to mine

The taxpayer was the beneficiary of various family settlements the assets of which included mineral rights.

The trustees granted wayleaves to mining companies to drill prospect and explore for coal.

The taxpayer received the payments via the trustees. In the relevant tax returns he maintained that TA 1988 s 122 applied to the payments so that half was taxable as a chargeable gain under TCGA 1992 s 201 and the other half was liable to income tax.

HMRC assessed the payments to tax under TA 1988 s 119 as fully taxable as income. The taxpayer appealed.

The Special Commissioner allowed the appeal so HMRC appealed.
The question at issue was to what extent the sums received were payable under a mineral lease or agreement as defined in TA 1988 s 122(6).

The Court of Session accepted that the payments fell within...