Subject-Matter Index

Agreement capping interest payment. See Deductions—loan arrangements

Annual allowances

Appeals

errors of law

appeals to Royal Court and Court of Appeal on errors of law only—may include misconstruction of tax legislation; material departure from procedure or fairness; or perversity (namely that facts found such that no person acting judicially and properly instructed as to law could have made conclusion): Gold v. Income Tax Administrator (C.A.), 1997–99 GLR 306

statement of case

under Income Tax (Guernsey) Law 1975, s.80(3), tribunal to set out facts and determination—enables taxpayer and Revenue to know tribunal’s conclusion and reasons—satisfies imperative for fairness, enables parties to decide whether to appeal, and assists appeal court: Gold v. Income Tax Administrator (C.A.), 1997–99 GLR 306

Bad and doubtful debts. See Deductions—bad and doubtful debts

Business allowances

unused allowances

unabsorbed annual allowances for one business cannot be carried forward and added to allowances of another business of taxpayer—Income Tax (Guernsey) Law 1975 only permits carrying forward within same business (unlike regime for losses): Les Nicholles Vineries Ltd. v. Income Tax Administrator (C.A.), 2000–02 GLR N [10]

Capital assets

acquisition and disposal

cost of acquiring or disposing of investments by investment company not “permissible management expenses” within Income Tax (Guernsey) Law 1975, s.169 and not allowed as deduction for income tax purposes: Income Tax Administrator v. Cachemar Ltd. (C.A.), 2005–06 GLR 314

loans

loan not usually capital asset, but may be, e.g. if so inextricably linked with retaining taxpayer’s primary capital asset that properly regarded as capital asset itself: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

Capital expenditure. See Income or capital—failure of capital project

Capital gains. See Income or capital—adventure in nature of trade

Deductions

acquisition and disposal of capital assets. See Capital assets—acquisition and disposal

bad and doubtful debts

bad and doubtful debt qualifies under Income Tax (Guernsey) Law 1975, s.7(3)(e) as deduction allowable against profits only if incurred as part of trading activity—debt arising from failure of capital project remains capital expenditure and by virtue of s.7(2)(a) not deductible: Income Tax Administrator v. Broadaker Co. Ltd. (Royal Ct.), 2005–06 GLR 152

burden of proof

under Income Tax (Guernsey) Law 1975, s.18, for purposes of income tax assessment burden on taxpayer to show deductions allowable: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

capital expenditure

in absence of relevant Guernsey authority, English test applied for whether payment constitutes revenue or capital expenditure for purpose of deductions—court to balance various factors pointing one way or other, e.g. nature and effect of payments and of benefits obtained in return: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

loan may be capital asset, e.g. if inextricably linked with retaining taxpayer’s primary capital asset—payment to effect related agreement may be capital expenditure if agreement necessity to obtaining loan or causes fundamental change to loan agreement itself: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

loan arrangements

loan not usually capital asset, but may be, e.g. if so inextricably linked with retaining taxpayer’s primary capital asset that properly regarded as capital asset itself—payment to effect base rate cap agreement to protect against adverse interest rate fluctuations may be allowable deduction from income for tax purposes: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

“permissible management expenses”

in Income Tax (Guernsey) Law 1975, s.169, expenses “laid out or expended wholly and exclusively for the purpose of managing the company” in context of investment companies encompass dealing in investments, safe custody, the collection of income and implementing administrative measures: Income Tax Administrator v. Cachemar Ltd. (Royal Ct.), 2005–06 GLR 161

“management” of investment company to be given broad construction in Income Tax (Guernsey) Law 1975, s.169—includes both making and executing management decisions but cost of acquiring or disposing of investments not permissible expense: Income Tax Administrator v. Cachemar Ltd. (C.A.), 2005–06 GLR 314

revenue expenditure

agreement with lender making taxpayer less exposed to adverse interest rate fluctuations on loan suggests payment to effect it deductible revenue expenditure: Taxes Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

if beneficial effect of agreement to commute revenue expenditure, payment to effect agreement also revenue expenditure: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

loan may be capital asset, e.g. if inextricably linked with retaining taxpayer’s primary capital asset, but cost of related agreement to control liability under loan may be revenue expenditure if not necessary for obtaining loan and no fundamental change made to loan agreement itself: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

Financial provision on divorce. See FAMILY LAW (Financial provision—tax liabilities)

Guernsey Tax Tribunal

opportunity to be heard. See Guernsey Tax Tribunal—procedure

procedure

additional research by tribunal—if lay tribunal undertakes own research and relies upon it in written reasons, must inform parties of results of research and invite submissions on further arguments disclosed: Income Tax Administrator v. Cachemar Ltd. (Royal Ct.), 2005–06 GLR 161

although Income Tax (Guernsey) Law 1975 encourages informal and expeditious procedure, Tribunal has overriding duty to give proper consideration to matters before it and always observe principles of natural justice—some degree of formality may be needed in proceedings, e.g. cross-examination of witnesses, to make proper assessment of evidence and reach fair conclusion: Carpenter v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 260

although Income Tax (Guernsey) Law 1975 encourages informal and expeditious proceedings, to ensure fairness Tribunal to avoid serious procedural irregularities, e.g. in appeal against income tax assessment, to allow taxpayer to address Tribunal first and have final right of reply since under s.18 burden of proof on taxpayer to show deductions allowable: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

for appeals against assessments to income tax, parties to provide indexed, paginated and chronological bundle of relevant documents and written summary of arguments with attached legal authorities few days before hearing: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

point not argued—cannot raise on appeal point not argued before Guernsey Tax Tribunal—point not raised or decided if no evidence on it put before Tribunal: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

reliance on members’ experience—Tribunal to require expert evidence to understand technical corporate issues, rather than relying exclusively on members’ own experience—taxpayer to be given opportunity to question Tribunal: Bath Ltd. v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 168

since under Income Tax (Guernsey) Law 1975, s.80 unsuccessful party has only 21 days to ask Tribunal to state and sign a case, delay in compliance by Tribunal regrettable—beneficial to make written transcript of hearing to speed up process: Income Tax Administrator v. Tremoille Properties Ltd. (Royal Ct.), 2000–02 GLR 295

written reasons

to be provided very shortly after announcement of decision, to ensure Tribunal members’ memories of oral evidence fresh: Bath Ltd. v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 168

Income or capital

adventure in nature of trade

economic necessity for sale of property highly unlikely to be catalyst for change of intent from investment to trade, as decision to trade has tax consequences requiring serious consideration, especially if one-off transaction—compelling evidence required to show economic necessity caused change in intent: Carpenter v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 260

property developer selling shares in own company at profit to prospective partner as price of participation in joint development venture—not capital accretion but “adventure in nature of trade” within definition of “business” in Income Tax (Guernsey) Law, s.209(1) and therefore taxable as income: Glass v. Income Tax Administrator (Royal Ct.), 2007–08 GLR 229

single one-off transaction can be “adventure in nature of trade” if part of overall trading scheme, i.e. identifying opportunity, negotiating purchase and securing joint venture partner—difference between investing (capital enhancement) and dealing (trade): Glass v. Income Tax Administrator (Royal Ct.), 2007–08 GLR 229

single transaction can be adventure in nature of trade, but sale of UK property developer’s Guernsey home more likely to be investment transaction—intention to sell when purchasing property not itself decisive of whether transaction trade or investment—living in property, high-quality renovation and lack of rental income strong signs that sale realization of investment and not trading profit: Carpenter v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 260

when considering whether transaction investment or adventure in nature of trade, court to consider all circumstances against established “badges of trade”: Carpenter v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 260

capital expenditure. See Deductions—capital expenditure

failure of capital project

debt arising from failure of capital project remains capital expenditure—fails to qualify under Income Tax (Guernsey) Law 1975, s.7(2)(a) as deduction, and under s.7(3)(e) may not be set against income, since not incurred as part of trading activity: Income Tax Administrator v. Broadaker Co. Ltd. (Royal Ct.), 2005–06 GLR 152

loan arrangements. See Deductions—loan arrangements

profits from trade. See Income or capital—adventure in nature of trade. Income or capital—failure of capital project

revenue expenditure. See Deductions—revenue expenditure

dividends—even if shares issued and sold as part of capital venture, dividends liable to tax as income: Bath Ltd. v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 168

sale

profits from sale of preference shares issued by property developer to venture capital provider in exchange for funding of property purchase not taxable if made as part of capital venture rather than loan—if share agreement gives buyer corporate control over seller, may be indicative of capital venture: Bath Ltd. v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 168

whether profits subject to income tax—factors to be considered: Bath Ltd. v. Income Tax Administrator (Royal Ct.), 2003–04 GLR 168

test to be applied. See Deductions—revenue expenditure

Liability to foreign income tax

joinder of HMRC

joinder to Hastings-Bass proceedings may be allowed if asking court to resolve issue which might affect right to enforce tax legislation in UK, remedy sought not indirect application of UK tax law in Guernsey, and HMRC not raising defence in order to assert tax collection right: H.M. Revenue & Customs v. Gresh (C.A.), 2009–10 GLR 239

no joinder of HMRC to Hastings-Bass proceedings (if UK tax liability may arise because trustee’s discretion exercised on incorrect advice)—joinder may result in inappropriate indirect enforcement of UK tax law: Gresh v. RBC Trust Co. (Guernsey) Ltd. (Royal Ct.), 2009–10 GLR 216

Loans. See Capital assets—loans. Deductions—capital expenditure. Deductions—loan arrangements. Deductions—revenue expenditure

Opportunity to be heard. See Guernsey Tax Tribunal—procedure

Overpayment

interest

Administrator of Income Tax has no power to pay interest on overpaid tax—court may make supplemental order for interest in appropriate case, e.g. if new facts discovered after conclusion of proceedings in which tax held overpaid, but to consider importance of finality in proceedings and exercise jurisdiction cautiously: Carpenter v. Administrator of Income Tax (Royal Ct.), 2003–04 GLR N [26]

no claim for interest on overpaid income tax under Judgments (Interest) (Bailiwick of Guernsey) Law 1985, s.1(1), since not claim for debt: Carpenter v. Administrator of Income Tax (Royal Ct.), 2003–04 GLR N [26]

Profits from trade

adventure in nature of trade. See Income or capital—adventure in nature of trade

Property development. See Income or capital—adventure in nature of trade

Tax Information Exchange Agreement. See TAXATION (Exchange of tax information)