The French Cour de cassation has just handed down a judgment stating that when a usufruit is sold between two SCIs and the usufruit is vigaer, in other words determined by reference to an individual’s life, the statutory table at article 669 CGI has to be used to establish the value of the usufruit and therefore the nue-propriété in relation to the whole. Cass. com. 26-9-2018 n° 16-26.503 FS-PB, Directeur régional des finances publiques d’IIe-de-France c/ Sté civile Placimmo
Anyone being told by HMRC Compliance that HMRC Valuation has a “legal” English method of valuing the legal interest in land as a settlement should therefore challenge that position and refer them to that article and the French deeds of conveyance.
It is an affornt both to common sense and to the common law jurisdiction and rule that neither Parliament, the Courts, nor for that matter the First Lord of teh Treasury can appropriate, adjudicate or redefine foreign immovable rights in land situated out of the jurisdiction. Parliament derives any authority that it has from the extent and the limits of the common law, both territorial, in matter in rem and personal jurisdiction, not from anywhere else.
Section 43(2) ITA 1984 cannot be interpreted so as to enable such an extension to override foreign land and foreign direct real property rights. As it is a “settlement” provision, it is limited to deemed trusts of personalty over movables and express equivalents to actual trusts over foreign land, not to the arbitrary redefinition of real property rights abroad in the absence of such express trusts or equivalents. The Minutes of Standing Committee A 1975 11th Sitting 17th February 1975 can only make any legal sense when read from that perspective. No mention was made by Dr. Gilbert of any matter extending the scope of the CTT wording to affect foreign immovable property rights in the manner in which HMRC are currently contending. Dr Gilbert made it clear that he was aiming at Liechtenstein anstalts and foundations, for example, and the effect of the section was simply to override immovable rights in rem held under them into personal rights, as were express trust over foreign immovable rights in rem.
Otherwise it simply does not work. Perhaps HMRC Trust and estates should have employed a real lawyer to obtain fiscal enlightenment rather than leaving it to a certain Mr Davidson’s personal touch.
Peter Harris