P A Lorber (Decision No.1) v Commissioners for Her Majesty's Revenue and Customs
Decision date: 3 February 2011
Neutral citation: [2011] UKFTT 101 (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 interest on bank accounts in Paul and Susan Lorber’s joint names was taxable on Paul and whether large accounts held in the children’s names were settlements taxable on Paul under ss.660A/660B. The Tribunal held Paul failed to prove HMRC had agreed the joint-account income belonged solely to Susan so those assessments stood, but found on the balance of probabilities that the children’s accounts derived from the grandparents (Adolf and Berta) so Paul was not the settlor and the settlor-based assessments under ss.660A/660B were dismissed.
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: high
A PAYE coding notice or later amendment does not, without the prescribed declaration (Form 17) or other formal agreement, conclusively convert joint-account income into one spouse’s income for tax purposes; the taxpayer must prove such an agreement. Separately, for settlement taxation under ss.660A/660B, the identity of the settlor is a factual question decided on the balance of probabilities from the available evidence (account histories, schedules of gifts, witness statements); an attorney’s execution of transfers does not automatically make the attorney the settlor if the transfers are shown to derive from the donor.
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 Tribunal observed that use or mixing of children's funds for family purposes can cast doubt on claimed gifts but does not automatically displace credible documentary or testimonial evidence that funds originated from the grandparents. It also noted that an absence of documentary proof of a purported telephone agreement with tax authorities weakens a claim that HMRC agreed to treat income as belonging solely to one spouse.