· Income was paid to the appellant for behoof of the children out of an ante-nuptial marriage settlement.
· Finlay J accepted that the facts of Drummond were different but considered that it really covered the present case. He said, ‘I think that, in the light of the authorities, one ought to hold that when the income is in fact paid over to the child, that is the income of the child. The substantial merits appear to be all that way.’
· Shipwright and Baldry: It is normally thought on the basis of the proposition laid down by Jenkins LJ in IRC v Whitworth Park Coal Co that, inter alia, ‘the payment in question must fall to be made under some binding legal obligation as distinct from being a mere voluntary obligation.’
· It might therefore have been thought that a payment by the trustees of a discretionary trust would not be an annual payment as there is no entitlement to the income unless and until the trustees have exercised their discretion in favour of the recipient. However this is not the case. Relying on what was said in the Schedule D Case V case of Drummond, and in particular by Lord Wrenbury, that as soon as the discretion vested in the trustees is exercised in favour of the child the resulting payment seemed to him to be a payment of income to which the child is entitled, subsequent cases such as the Lord Tollemache case have led to payments by discretionary trustees being regarded as liable to withholding of basic rate tax.