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All one transaction

05 September 2017
Issue: 4614 / Categories: Tax cases

Trustees of the Morrison 2002 Maintenance Trust and others v CRC, Upper Tribunal (Tax and Chancery Chamber), 3 August 2017

Capital gains tax on disposal of trusts’ shareholdings

The taxpayers entered into an arrangement to sell shareholdings in Scottish trusts without incurring capital gains tax. It entailed the establishment of Irish trusts the exercise of put options the purchase and sale of the shareholdings by the Irish trusts and the replacement of these trustees with the original ones under the Scottish trusts and the consequent repatriation of these trusts. The aim was to take advantage of TCGA 1992  s 144ZA which disapplies the market rule for determining the consideration for the disposal of shares through an option.

The issue was whether the scheme should be treated as a single composite transaction for the disposal of the Scottish trusts’ shareholdings. The First-tier Tribunal decided there was a single composite transaction: the sale of shares at market value. The taxpayers appealed saying the First-tier Tribunal had erred...

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