The House of Lords has decided Jones v. Garnett (Arctic Systems) in favour of Mr Jones overall, while agreeing with HMRC on the issue of whether the arrangement constituted a settlement for the purposes of the settlements legislation. In particular, the House of Lords has held that a gift consisting in ordinary shares is not a gift wholly or substantially of income. This article analyses the opinions in the House of Lords and the Government response to the decision, and provides some practical advice for tax advisers.