The judgment is very long, but the
discussion on tax is limited to one self-contained paragraph which
reads as follows:
[43]
This transfer is ordered on the footing that business
hold-over relief will be available to the husband; that the wife
will receive the shares at the husband’s base value; and that,
accordingly, no liability to CGT will arise on the husband as a
result of the transfer. I have seen an extract from an Inland
Revenue manual which confirms that a court-ordered transfer of
business assets does in principle satisfy the conditions for a claim
for hold-over relief; but which goes on to suggest that actual
consideration given by the donee may reduce the gain potentially
eligible to hold-over relief to nil. The view of the Inland
Revenue appears to be that the actual consideration is the surrender
by the donee of rights which she would otherwise be able to exercise
to obtain alternative financial provision. I do not share
their view about that and I have to say that this view seems to me
to be based on a misconception. In an ancillary relief hearing
neither party has any ‘rights’ as such at all: all the
powers are vested in the court which may or may not exercise them.
The parties may make suggestions as to how those powers are to be
exercised. That is all. So when I order a transfer of
shares in favour of the wife on a clean break basis she is not
‘giving up’ her claim for maintenance as a quid pro
quo. I am simply exercising my statutory powers in the way I
consider to be fair. This would be equally the case where the
court was making a consent order, for although the parties may have
made their agreement it is for the court independently to adjudge
its fairness: see Xydhias v Xydhias
[1999] 1 FLR 683 at 691 where Thorpe LJ stated:
‘An
even more singular feature of the transition from compromise to
order in ancillary relief proceedings is that the court does not
either automatically or invariably grant the application to give the
bargain the force of an order. The court conducts an independent
assessment to enable it to discharge its statutory function to make
such orders as reflect the criteria listed in s 25 of the
Matrimonial Causes Act 1973 as amended.’
Although
I cannot, of course, ultimately bind the Inland Revenue, I am
satisfied that, at least in this case, the wife gives no
consideration for the transfer of the shares I order in her favour;
and that, accordingly, hold-over relief should be available.