Distributions of a capital nature paid by a non-UK resident company to a UK resident taxpayer were dividends liable to income tax and not capital gains tax in the UK.
The appellant owned shares in a Jersey-incorporated company (G) resident in Switzerland for tax purposes. Between the tax years 2011/12 and 2015/16, the appellant received cash distributions, together with one in specie distribution of shares in a related company (L), which were all debited to G’s share premium account, as permitted under Jersey law. The appellant considered that the distributions fell outside an income tax charge under ITTOIA 2005, s 402), because they were ‘dividends of a capital nature’ (within ITTOIA 2005, s 402(4)), so were chargeable to capital gains tax instead.
HM Revenue and Customs disagreed and assessed the appellant to income tax on the distributions. The appellant appealed. The First-tier Tribunal (FTT) and Upper