Unicomer (St Vincent) Ltd (Appellant) v Appeal Commissioners and another (Respondents) (St Vincent and the Grenadines)

Case summary

Case ID

JCPC/2025/0015

Jurisdiction

St Vincent and the Grenadines

Parties

Appellant(s)

Unicomer (St. Vincent) Ltd.

Respondent(s)

Appeal Commissioners

The Comptroller of Inland Revenue

Issue

(1) Is an arrangement under which the appellant obtained insurance from an insurer who reinsured the risk with an entity related to the appellant, such that 95% of the premiums were ultimately received by that related entity, a transaction falling within the meaning of section 23 of the Income Tax Act, Chapter 435 (“ITA”)? (2) Is the appellant required to pay withholding tax on the premiums received by its related entity pursuant to section 66 of the ITA? (3) Are profits made by the appellant from hire-purchase agreements taxable at the time the agreements were entered into or upon receipt of the hirer’s instalments under section 9 of the ITA?

Facts

The appellant (“Unicomer”) is a company registered in Saint Vincent and the Grenadines. A significant part of Unicomer’s business involves sales under hire-purchase agreements. Unicomer took out a Credit Protection Insurance (“CPI”) policy with Massy United Insurance (“United”) to provide insurance against the risks associated with hire purchase agreements. Unicomer accordingly paid premiums to United pursuant to this policy. United reinsured its liabilities under the CPI policy with Canterbury Insurance Company Limited (“Canterbury”). Canterbury was in common ultimate ownership with Unicomer within the Unicomer group. The effect of the insurance arrangements was that 95% of the CPI premiums paid by Unicomer eventually reached Canterbury. The CPI premiums were deducted from Unicomer’s accounts as an expense, which reduced Unicomer’s income and therefore its tax liability. Following an audit of Unicomer’s accounts for the period 2007 to 2011, the second respondent (the “Comptroller”) gave Unicomer notice that the Inland Revenue Department intended to raise additional assessments to tax on it because, amongst other things, (i) the CPI payments were paid by Unicomer to Canterbury as a related party and (ii) Unicomer’s tax liability on profits arising from hire-purchase agreements crystallised when the hire-purchase agreement was entered into, rather than when the instalments were received. By Notice of Appeal filed on 26 April 2017, Unicomer appealed the decision of the Comptroller to the Appeals Commissioners, who upheld the Comptroller’s decision. On 28 December 2018, Unicomer filed an appeal in the High Court against the decision of the Appeals Commission. The appeal before the High Court took place as a rehearing. The High Court affirmed the decision of the Appeals Commission, holding that (i) the CPI premiums were paid as part of a tax avoidance transaction for the purposes of section 23 ITA; (ii) the CPI premiums were subject to withholding tax pursuant to section 66 ITA; and (iii) the deferral of hire purchase profits was disallowed under section 9(1)(b) ITA and, accordingly, Unicomer became liable to pay tax on hire purchase profits when the hire purchase agreement was entered into. Unicomer then appealed to the Court of Appeal. The Court of Appeal dismissed the appeal. Unicomer now appeals to the Judicial Committee of the Privy Council.

Date of issue

19 February 2025

Case origin

Appeal As of Right

Back to top