Re Vandervell Trustees Ltd

Re Vandervell Trustees Ltd
Court	House of Lords
Citation(s)	[1971] AC 912
Keywords
Income tax

Re Vandervell Trustees Ltd [1971] AC 912 is an UK tax law case, concerning the ability of the Revenue to amend tax assessments.

This case was the second in a series of decisions involving Tony Vandervell's trusts and his tax liability. The first was Vandervell v Inland Revenue Commissioners, which concerned whether an oral instruction to transfer an equitable interest in shares complied with the writing requirement under Law of Property Act 1925, section 53(1)(c), and so whether receipt of dividends was subject to tax.

The third was Re Vandervell Trustees Ltd (No 2), which concerned whether Vandervell could be taxed because he could have an equitable interest through a resulting trust if he had exercised an option right.

Lord Diplock also summarised the facts as follows.

Section 5 (6) of the Income Tax Management Act 1964 provides that after notice of assessment has been served 'the assessment shall not be altered except in accordance with the express provisions of the Income Tax Acts.' The only way in which an assessment can be altered under the provisions of the Income Tax Acts is by the special commissioners on an appeal to them by the party assessed. The powers of alteration are conferred by section 52 (5) and (6) of the Income Tax Act 1952, as amended by the Income Tax Management Act 1964, and made applicable to surtax assessments by section 229 (4) of the Income Tax Act 1952 . Section 52 (5) and (6) are as follows: *941

'(5) If, on an appeal, it appears to the majority of the commissioners present at the hearing, by examination of the appellant on oath or affirmation, or by other lawful evidence, that the appellant is overcharged by any assessment or surcharge, the commissioners shall abate or reduce the assessment or surcharge accordingly, but otherwise every such assessment or surcharge shall stand good. (6) If, on any appeal, it appears to the commissioners that the person assessed or surcharged ought to be charged in an amount exceeding the amount contained in the assessment or surcharge, they shall charge him with the excess.'

The executors have not been paid the dividends. In 1968 they brought proceedings against the trustees to recover them. These were started by originating summons but are now being continued as a witness action with pleadings. Issues of fact as well as issues of law are involved. The trustees resist the claim upon the ground that at the time the dividends were received the late Mr. Vandervell had already parted with his beneficial interest in the shares or, if not in the shares, at any rate in the dividends declared on them. Alternatively, they say that Mr. Vandervell disposed of his interest in the dividends in 1965 after they had been received by the trustees.

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