Vestey v Inland Revenue Commissioners [1979] 3 All ER 976

Facts

  • The Vestey family, leading figures in meat production, established trusts designed to lower their tax liabilities.
  • The Inland Revenue initially permitted exemptions for these trusts, effectively accepting the Vestey family's tax planning arrangements.
  • At a later stage, the Revenue decided to revoke these exemptions and claimed outstanding taxes from the Vesteys.
  • The Vestey family argued that the Revenue could not withdraw previously granted exemptions.

Issues

  1. Whether administrative allowances or exemptions, not set by statute, are legally binding on the Inland Revenue.
  2. Whether the Revenue is entitled to alter or revoke previously approved tax exemptions for trust arrangements.
  3. Whether taxpayers can rely on legitimate expectations based on earlier Revenue practices or approvals.

Decision

  • The House of Lords held that allowances or exemptions not prescribed by law do not legally bind the Inland Revenue.
  • Such allowances were deemed to reflect administrative discretion, not statutory obligation, and may be changed or withdrawn.
  • The Lords confirmed that the Revenue may alter its enforcement of tax laws, even if this reverses prior administrative exemptions.
  • Taxpayers cannot rely on such allowances unless the Revenue gave explicit and specific assurances of their continuance.

Legal Principles

  • Administrative practices or allowances created by the Revenue are not enforceable unless anchored in statute.
  • Legitimate expectation arises only through specific and explicit assurances from the Revenue, not merely from past use.
  • The case reinforced the requirement that trusts and other tax planning structures directly comply with tax statutes rather than rely on mutable administrative allowances.

Conclusion

Vestey v Inland Revenue Commissioners established that the Revenue’s administrative allowances, if not given by law or by explicit assurance, may be withdrawn at any time. Taxpayers and professionals must closely comply with statutory tax requirements, as reliance on discretionary or historical exemptions carries significant risk, particularly in trust-based estate planning.

The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.
No resources available.

Job & Test Prep on a Budget

Compare PastPaperHero's subscription offering to the wider market

PastPaperHero
Monthly Plan
$10
Assessment Day
One-time Fee
$20-39
Job Test Prep
One-time Fee
$90-350

Note the above prices are approximate and based on prices listed on the respective websites as of May 2025. Prices may vary based on location, currency exchange rates, and other factors.

Get unlimited access to thousands of practice questions, flashcards, and detailed explanations. Save over 90% compared to one-time courses while maintaining the flexibility to learn at your own pace.

All-in-one Learning Platform

Everything you need to master your assessments and job tests in one place

  • Comprehensive Content

    Access thousands of fully explained questions and cases across multiple subjects

  • Visual Learning

    Understand complex concepts with intuitive diagrams and flowcharts

  • Focused Practice

    Prepare for assessments with targeted practice materials and expert guidance

  • Personalized Learning

    Track your progress and focus on areas where you need improvement

  • Affordable Access

    Get quality educational resources at a fraction of traditional costs

Tell Us What You Think

Help us improve our resources by sharing your experience

Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

Saptarshi Chatterjee

Saptarshi Chatterjee

Senior Associate at Trilegal