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TAAR provisions on MVLs

14 February 2018 / Kevin Slevin
Issue: 4635 / Categories: Comment & Analysis

Into the great unknown

  • The targeted anti-avoidance rule in ITTOIA 2005 s 396B has far-reaching consequences if a members’ voluntary liquidation takes place.
  • The aim of the legislation is to counter ‘phoenixism’ – starting a new business soon after winding up a previous one.
  • Taxpayers are expected to self-assess if the new targeted anti-avoidance rule will result in a liability under s 396B.
  • Condition C (see s 396B(4)) is met where at any time within the period of two years beginning with the date on which the liquidation distribution in question is made any one of the four Condition C ‘trigger events’ occurs. These are that:
  1. The condition does not only apply when a new business is started after liquidation or distribution; other pre-existing businesses may trigger a liability.
  2. ...

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