Annette Tonkin v The Commissioners for HMRC
Decision date: 19 June 2025
Neutral citation: [2025] UKFTT 750 (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 a close company's payment under a 2012 disguised remuneration scheme should be apportioned to the participator, Ms Tonkin, for inheritance tax purposes after HMRC charged £83,020 under IHTA 1984 s 94. The First-tier Tribunal held that the relevant payment qualified as "profits or gains" within s 94(2)(a) because it was employment income taken into account for income tax, and therefore s 94(2)(a) prevented apportionment of the company's transfer of value to Ms Tonkin. The appeal was allowed and the Tribunal did not decide the separate corporation tax / s 12 issue as it was unnecessary.
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's ratio is that IHTA 1984 s 94(2)(a) should be read to include payments taxed as employment income within the phrase "profits or gains" and, where a company's transfer of value is attributable to such an amount taken into account for income tax, s 94(2)(a) excludes apportionment of that transfer to the participator. The Tribunal applied a realistic view of the transactions to attribute the transfer to the ultimate beneficial recipient despite intermediary trust/nominee steps.
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 judgment contains observations (not necessary to the decision) that HMRC's positions across income tax and inheritance tax should be consistent and that differing "realistic views" for different taxes are not justified; it also comments on corporation tax deduction provisions (ss 1288, 1290, 1291 CTA 2009) without resolving their application.