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Transfer not tainted

24 August 2012
Issue: 4368 / Categories: Tax cases , Income Tax
Backhouse v Revenue and Customs Prosecution Office, Court of Appeal

The defendant B owned a private aircraft with J a wealthy businessman. Under an agreement dated 21 December 2001 they each had a 50% stake in the plane and shared the expenses on a 50:50 basis.

J was subsequently convicted of tax fraud and money laundering. In 2003 he and B made a new agreement terminating J’s interest in the aircraft because he no longer had any use for it.

Referring to the Criminal Justice Act 1988 s 74 and s 102 the Revenue and Customs Prosecution Office said this was a tainted gift to B and claimed the value of J’s share. B appealed.

The High Court found the 2003 agreement was not commercial and the transfer should be treated as a gift as the value of the share in the aircraft was less than its true value.


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