The vendors of a £5m development site at Bridge Farm, Hook, Hampshire, who lost a tax liability dispute with the Inland Revenue, have been given permission to appeal by the House of Lords.
Michael Jerome and his wife entered into a contract, in April 1987, to sell 13.2 acres of land to Conder Developments Ltd. The completion date was scheduled for May 1994.
In December 1988, the vendors established two Bermudan settlements, of which a Bermudan trust company was trustee. A year later, they transferred their interest in the relevant land to the settlements. Despite the transfer, the Inland Revenue assessed capital gains tax, for the 1987/1988 tax period, of £195,148 in respect of the sale.
The vendors challenged the assessment, claiming that they were no longer liable for tax since they had transferred their interest in the property to the overseas settlements. The High Court agreed, holding that, in 1987/1988, the Jeromes did not make any capital gains tax disposal of the undivided shares in the part of Bridge Farm that they assigned to the Bermudan trustee.
The Court of Appeal, however, overturned the decision. It held that the date for assessment was the date of the original contract in 1987, and the vendors were therefore liable.
The House of Lords has now given permission for a further appeal. No reasons have been given for its decision.
Jerome and another v Kelly (HMIT) House of Lords
References: PLS News 14/4/03
