DMWSHNZ Ltd. – English Court of Appeal finds that the repayment of a note does not entail its disposal to the debtor

Lewison LJ rejected a U.K. taxpayer’s submission that when a debtor repays a note, there is a disposal of the note to the debtor given that following such repayment the debtor is still required to cancel the note (stating that “In the real world when the debt was repaid the obligation to pay was discharged; and there were no remaining creditor's rights that could have been transferred to the Issuer.”)

The correctness of this view is even more apparent in Canada, given that s. 84(9) deems the cancellation of a security to entail its disposition to the issuer only in the case of a share, although CRA professes (e.g., in 2010-0385771E5) that a trust distribution to capital beneficiaries in satisfaction of their interest entails an acquisition of property by the trust.

Neal Armstrong. Summaries of DMWSHNZ Ltd. v. Commissioners for Her Majesty's Revenue and Customs, [2015] BTC 32, [2015] EWCA Civ 1036, under s. 69(1)(b) and Statutory Interpretation – Purpose.