David Thomas Patmore v Commissioners for Her Majesty's Revenue and Customs
Decision date: 14 July 2010
Neutral citation: [2010] UKFTT 334 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether dividends paid to Mrs Patmore were income arising under a settlement attributable to Mr Patmore for the purposes of s660 ICTA. The Tribunal found Mrs Patmore had a constructive trust over a substantial proportion of the shares (giving her a 42.5% beneficial entitlement) so only dividends in excess of that beneficial share amounted to a settlement caught by s660; the assessments were adjusted accordingly. The outright‑gift exception did not exclude the relevant income.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
The Tribunal applied s660 ICTA as requiring an element of gratuity or bounty for an arrangement to be a settlement; where a purchaser spouse contributed capital but held a disproportionately small legal share, equity may impose a constructive trust reflecting the beneficial interest, and where dividends are paid in accordance with that beneficial interest they are not a settlement, though excess payments can be caught by s660.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The decision indicates (obiter) that choosing to pay dividends on one class of shares rather than another can create a settlement if the dividend diversion is gratuitous; HMRC internal guidance is not determinative of the statutory test; and s660 can operate symmetrically (an intended outright gift could still engage the provision).