Irving v HMRC [2008] EWCA Civ 6

Mr Irving's employer, Lonsdale, transferred £145,000 worth of shares into an unregistered pension scheme in his name. While disclosing the transfer on his tax return, he claimed that it did not create a charge to tax.

HMRC however included a charge to tax and Mr Irving appealed to the Commissioners who concluded that tax was payable. He appealed to the High Court which upheld the decision of the Commissioners.

Mr Irving then appealed to the Court of Appeal which held that the transfer of shares into an unregistered pension scheme represented the payment of “a sum” under the Income and Corporation Taxes Act 1988 s595(1) and therefore is considered income of the individual in respect of whom the payment is made, and chargeable to tax.

View the Judgment.

Comment: Unfortunately for Mr Irving, the Court of Appeal decided that although the legislation had been drafted in a way which meant the Court had to reason its way to a meaning which was not the natural meaning of the words, assets which include both money’s worth and cash are described in the legislation as "a sum" (and their delivery described as payment), with the result that there was a charge to tax.