JP Gilchrist v HMRC

In JP Gilchrist v HMRC (FTC/89/2012 – 11 April 2014) the UT held that the 10 year charge (payable under IHTA 1984 s 64) by a discretionary trust was payable in relation to the proceeds of sale of ordinary shares issued by way of scrip dividend.

The issue was whether the proceeds of sale were ‘income’ for trust law purposes. If they were they could not be part of the ‘relevant property’ (IHTA 1984 s 58) for the purpose of section 64 and therefore escaped the charge. Whether the proceeds were ‘income’ in turn depended on whether ICTA 1988 s 249(6) deemed the scrip dividend shares to be trust income as a matter of general trust law.

Referring to the Court of Appeal’s decision in Howell v Trippier [2004] EWCA Civ 885 the tribunal noted that the question was whether the ‘clothing of the actual shares...