Vandervell v IRC [1967]

V decided to give money to the Royal College of Surgeons.
Shares in Vandervell Products Limited, held by bank on
trust for V, were to be transferred to RCS.
Dividends were then to be declared, on which RCS would
pay no tax as they were a registered charity.
Option to repurchase shares given to the V family
trust company.
However, IRC charged V tax on the dividends on ground
that he had not fully divested himself of all the interest in the shares.
House of Lords unanimously decided that s53(1)(c) did
not apply and that V’s oral direction was valid.
However House of Lords did in fact find in favour of
IRC on ground that V family trust company held the buy-back option on ART for
This raised no s53(1)(c) issues, but the ART did mean
that V had not wholly divested himself of all interest in the shares and was
therefore liable to tax.