Oliver Marre successful in Tax Tribunal corporate reconstruction application

Oliver Marre has successfully obtained a Notification from the First-tier Tax Tribunal of advance clearance in respect of the Capital Gains Tax treatment of a corporate reconstruction arising in the context of divorce proceedings.

H and W had applied to HMRC under section 138 of the Taxation of Chargeable Gains Act 1992 for statutory clearance that restructuring relief would be available because the reconstruction of a valuable investment company was effected for bona fide commercial reasons and did not form part of a scheme or arrangements of which one of the main purposes is the avoidance of liability to capital gains tax or corporation tax.

HMRC declined to grant clearance.  The shareholders applied to the FTT.

The FTT accepted that the reconstruction was being undertaken for bona fide commercial reasons and without a tax avoidance purpose, and granted the Notification sought.  It will be of particular interest to other taxpayers to note the position taken by the FTT that the availability of alternative routes (with different tax consequences) should not result in a finding that the route chosen by H and W was not bona fide commercial.

Oliver was instructed by Jeffrey Nedas & Co.