© Mondaq® Ltd 1994 - 2021. First, the lower corporation tax rate makes the cost of double taxation lower than it once was. However, since a statute will not be allowed to
Lord Neuberger, President Lord Walker Lady Hale Lord Mance Lord Clarke Lord Wilson Lord Sumption . The judgment of the Supreme Court in Prest v Petrodel Resources Ltd [2013] UKSC 34 was eagerly anticipated by family and corporate lawyers alike. Also, changes to the taxation of dividend income mean dividend income will not be subject to double tax. Free, unlimited access to more than half a million articles (one-article limit removed) from the diverse perspectives of 5,000 leading law, accountancy and advisory firms, Articles tailored to your interests and optional alerts about important changes, Receive priority invitations to relevant webinars and events. The diagram above assumes there will be a combination of ‘A’, ‘B’, ‘C’ and ‘D’ ordinary shares. properties. Prest (Appellant) v. Petrodel Resources Limited and . v Simmonds [1971] 1 WLR 1381 was not always “sufficiently appreciated”. His wife of 15 years claimed that he and Petrodel were one and the same, and that she should have a multi-million pound award funded from the companies’ properties. The wife appealed this decision to the Supreme Court. It also makes the drafting of the documents more complex. Earlier this year, the Supreme Court handed down its much-anticipated judgment in Petrodel Resources Ltd v Prest. It would seem that in the future, the stronger financial party can avail themselves of an increasing number of options in terms of their assets and how they are held, not only as tax-efficient structures but also as protective structures on any divorce, while the weaker financial party will need to ensure that they take advice as early as possible and possibly during the marriage to protect their position on any divorce. This has overshadowed the Court’s decision to recognise a resulting trust, which achieved the same result as … Prest v Petrodel Resources Ltd [2013] UKSC 34. 6. that was improper or the assets were held in trust for the husband,
At the very least, an FIC will be one private company, the shareholders of which are family members and/or family trusts. Part I – Prest 2. law decision in Salomon v A Salomon. In a landmark judgment delivered on 12 June 2013 in the case of Prest v Petrodel Resources Ltd and Others1, the United Kingdom Supreme Court (UKSC) reviewed the law relating to piercing the corporate veil. When the husband failed to make the payment, Moylan J ordered the companies (in which the husband had a controlling interest) to transfer seven London properties to the wife in part satisfaction of the order, having found the husband to be the effective owner of those properties. POPULAR ARTICLES ON: Corporate/Commercial Law from Nigeria. In the weeks preceding the Supreme Court’s decision in Petrodel Resources Ltd v Prest, 1 the case was the subject of much attention and commentary, both in the media and legal circles. could be transferred to her under ancillary proceedings as part of
But … At the court of first instance, it was held that the veil of
Patrick Harney, Laura Brown and Holly Jones, Prest v Petrodel Resources Ltd - FICs as an alternative to a trust, Professional Postgraduate Diploma in Private Wealth Advising, Business Skills CPD - EBSCO Business Source Corporate Plus, CPD for the workplace - Alchemy Performance Assistant, STEP Standard Provisions (England, Wales and Northern Ireland), Making a Complaint: Our Disciplinary Process. This article first examines the implications of Petrodel from a family law perspective and goes on to consider the use of FICs as vehicles for separating control and ownership in a tax-efficient manner. The case provides a framework for an examination of a number of issues relating to the veil-piercing rule. Mondaq uses cookies on this website. subject to an existing legal restriction which he deliberately
The case
The "statute" referred to above is the Companies
the corporate veil for the purpose, and only for the purpose, of
Before considering FICs in detail, it is also helpful to consider other vehicles that have been put forward as an alternative to trusts since 2006. The trustee is given legal title to the trust property,
Prest and Beyond – Part 1 and Part 2 (Companies) 1. in a commercial dispute relating to the shares of a company. It also seems that the judgment has reaffirmed the asset-protection benefits of FICs in the absence of impropriety, so we will now consider their efficiency as a wealth-planning tool and, in particular, as an alternative to the trust. [2013] UKSC
the trust. Matrimonial Causes Act. Due to recent decreases in the corporation tax rate, there is now a significant difference between corporation tax rates (currently 23 per cent and due to decrease to 20 per cent by 1 April 2015) and the top income tax rate of 45 per cent. As a result of these changes, although the trust can still achieve separation of control and ownership, the separation now comes at a significant cost and a family can no longer be certain that the separation will be respected by the courts on a divorce. power. The trustee is given legal title to the trust property, but is obligated to act for the good of the beneficiaries. The Court unanimously restated the ruling of the Court of first
It was also based on the husband’s conduct during the proceedings and the fact that this allowed the Supreme Court to make adverse inferences and come to this conclusion ‘given that the defective character of the material is almost entirely due to his persistent obstruction and mendacity’ (para 43). personality. Facts. utilize the law of trusts, based on the facts of the case, to
in similar situations. In June this year, the Supreme Court (England’s highest Court) gave its decision in the case of Prest v Petrodel. divorced couple were citizens of both Great Britain and Nigeria. Registered number: 2632423. Petrodel Resources Ltd & Ors v Prest & Ors [2012] EWCA Civ 1395. The basis upon which the Supreme Court reached this decision (Lord Sumption giving the lead judgment) was by a different route from Moylan J, and it considered a number of different angles used by family lawyers to access assets held in corporate and trust structures on divorce. 2013 ] UKSC 34 Introduction calculation of the beneficiaries of the other ) of loans company., not the companies to allow piercing the veil of incorporation have generally been based on fraud declared on share... Wherein the veil of incorporation can be held on trust for the good the! 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