Sarah Squires
Sarah is a barrister at Old Square Tax Chambers, having been called to the bar in 2017. She has significant corporate tax experience, having practised a as a solicitor in leading City firms prior to re-qualifying as a barrister. She started her professional career in the tax department of Linklaters and then, following a move to Clifford Chance LLP in 2000, became a partner in their tax group in 2002.
Sarah is a member of the Law Society Tax Law Committee. In addition, she also acts as a consultant to various trade and other representation bodies on tax policy matters.
Sarah's practice is focused on general business and corporate tax matters, including in relation to real estate, finance and capital markets transactions.
12 Contributions by Sarah Squires
PRACTICE NOTES
SDLT relief for musharaka (alternative property finance): FA 2003 s 71A - conditions, transactional treatment, compliance and anti-avoidance (England and Northern Ireland)
Musharaka
A musharaka is an Islamic finance arrangement built on shared ownership, much like a partnership or joint venture. It offers a Shari’a-compliant way to acquire land without a conventional mortgage (see the example below: SDLT consequences of the first transaction) or to refinance a loan already secured on land...
Practice Notes
Musharaka—tax consequences of diminishing shared ownership arrangements—what is musharaka?
The structure and elements of a Musharaka transaction
SDLT relief under FA 2003, s 71A
For land in England or Northern Ireland, the most relevant stamp duty land tax relief for a musharaka is contained in section 71A of the Finance Act 2003 (land sold to a financial institution and leased to another person)...
This Practice Note
sets out the conditions for relief under FA 2003, s 71A
shows how the relief operates by reference to a musharaka structure
proceeds on the basis that:
the only asset held within the musharaka is land located in England, and
the eventual owner is not a first-time buyer of residential property...
Tax
PRACTICE NOTES
SDLT reliefs for Sukuk al ijara under FA 2009 Sch 61: land transfers, sukuk certificates, conditions, withdrawal and anti-avoidance (England and Northern Ireland)
Sukuk (singular: ‘sakk’) are a form of Shari’a-compliant financing, often described as Islamic bonds or investment certificates. Further background and context are available in the materials referenced below. For more detail, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment—What are sukuk? Where the statutory requirements are satisfied, sukuk can access the UK tax regime that applies to alternative finance investment bond (AFIB) arrangements. For guidance on those provisions, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment. Sukuk al ijara represents a specific variant of sukuk. In a sukuk al ijara, the asset the bond-issuer (the label used in legislation for the sukuk issuer) holds on trust for the sukuk investors (the certificate holders) is commonly land. The issuer obtains a land interest through a sale and leaseback; this sale and leaseback constitutes the ijara. For additional references, see Practice Notes: Sukuk al ijara—tax reliefs for sale and leaseback arrangements—What is sukuk al ijara?, The structure and elements of a Sukuk transaction and Islamic finance standard documentation in the context of real estate finance transactions. As sukuk al ijara involve tangible transactions in land, this type of structure can give rise to tax...
Tax
PRACTICE NOTES
Sukuk al ijara: Conditions for SDLT, CGT and capital allowances relief under FA 2009 Schedule 61: AFIB status, HMRC legal charge, 60% LTV, 10-year term and anti-avoidance
Sukuk
Singular: ‘sakk’ denotes Shari’a-compliant financing instruments, commonly known as Islamic bonds or certificates. For additional detail, see Practice Notes: The structure and elements of a Sukuk transaction and Sukuk—investment bond arrangements and their UK direct tax treatment—What are sukuk? Where the statutory criteria are satisfied, sukuk can access the UK tax regime that applies to alternative finance investment bond (AFIB) arrangements under those provisions. For guidance on those rules, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment. Sukuk al ijara represents a specific category of sukuk. In a sukuk al ijara, the asset that the bond-issuer (the legislative term for the sukuk issuer) holds on trust for the sukuk investors (the certificate holders) is frequently land. The issuer obtains an interest in that land via a sale and leaseback; this sale and leaseback constitutes the ijara arrangement. For further reading, see Practice Notes: The structure and elements of a Sukuk transaction and Islamic finance standard documentation in the context of real estate finance transactions. The UK has issued sukuk al ijaras over land, most recently in March 2021. In this Practice Note, the above matters are examined in greater depth and further practical context therein...
Tax
PRACTICE NOTES
Sukuk al ijara: UK CGT relief for sale-and-leaseback structures under FA 2009 Sch 61—conditions, withdrawal, timing and anti-avoidance
Sukuk
Sukuk (singular: ‘sakk’) are a form of Shari’a‑compliant financing, commonly referred to as Islamic bonds or certificates. For further detail, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment—What are sukuk? Where the relevant conditions are met, sukuk can qualify for the UK tax treatment that applies to alternative finance investment bond (AFIB) arrangements. For the specific rules, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment...
Sukuk al ijara
Sukuk al ijara is a particular variant of sukuk. In a sukuk al ijara, the asset that the bond‑issuer (the term used in legislation for the sukuk issuer) holds on trust for the sukuk investors (the certificate holders) is typically land. The issuer acquires an interest in that land via a sale and leaseback—the sale and leaseback constitutes the ijara. For more information, see Practice Notes: Sukuk al ijara—tax reliefs for sale and leaseback arrangements—What is sukuk al ijara?, The structure and elements of a Sukuk transaction and Islamic finance standard documentation in the context of real estate finance transactions. As sukuk al ijara involves genuine land transactions, this arrangement can trigger tax...
Tax
PRACTICE NOTES
Sukuk as alternative finance investment bonds (AFIB) in the UK: qualification tests, corporation tax, withholding tax, loan relationship and securitisation treatment for issuers and corporate holders
Shari’a-compliant financing arrangements
Shari’a‑compliant financing arrangements, otherwise described as Islamic financing arrangements, can be structured in a number of ways. To cater for the direct tax analysis of Shari’a financing variants, the UK has put in place specific provisions known as the alternative finance arrangement rules. The purpose of these UK rules is to ensure that, for direct tax purposes, a qualifying Shari’a‑compliant financing is taxed in the same manner as an equivalent conventional financing arrangement. Achieving that parity depends upon the arrangements meeting the relevant statutory conditions prescribed for alternative finance arrangements in the applicable legislation. Currently, the regime extends to five distinct categories of financing arrangement. Importantly, the direct tax framework for alternative finance is not limited solely to Islamic financing; non‑Shari’a structures can, in principle, be brought within its scope as well. Among the five categories is the investment bond arrangement, commonly known as an alternative finance investment bond, or AFIB. This Practice Note deals with AFIB arrangements. Sukuk, which are a type of Shari’a financing arrangement and are often referred to as Islamic bonds, may secure the UK tax treatment available to AFIB arrangements provided that all of the necessary conditions are satisfied. This Practice Note...
Tax
PRACTICE NOTES
UK alternative finance rules—tax and VAT treatment of Murabaha purchase and resale arrangements for companies: corporation tax, withholding tax, CGT and stamp taxes
Shari’a compliant financing arrangements
Shari’a‑compliant financing structures (also called Islamic financing) can be arranged in several ways. In the UK, bespoke provisions known as the alternative finance arrangement rules address the direct tax treatment of particular Shari’a financing models. These rules are designed to ensure that, for UK direct tax purposes, qualifying Shari’a‑compliant financing is treated in the same manner as a conventional loan. Achieving this treatment depends on the arrangement satisfying the relevant legislative conditions applicable to alternative finance arrangements. The regime currently extends to five distinct types of financing. However, some areas of tax legislation, such as VAT, have not adopted specific measures for Islamic financing, which can give rise to uncertainty and to circumstances in which Shari’a‑compliant finance is not aligned with the treatment of conventional finance. The alternative finance rules for direct tax are not limited solely to Islamic financing. Non‑Shari’a structures could also fall within their scope. One of the five alternative finance forms recognised in the UK tax rules is a purchase and resale arrangement...
Tax
PRACTICE NOTES
UK capital allowances for Sukuk al ijara (FA 2009 Sch 61): fixtures and SBAs, disregard of sale and leaseback land transfers, conditions and deemed disposals
Sukuk al ijara
Sukuk (singular: ‘sakk’) are a Shari’a-compliant financing mechanism, known as Islamic certificates or bonds. For details, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment—What are sukuk? Where the qualifying criteria are satisfied, sukuk can access the UK tax regime that applies to alternative finance investment bond (AFIB) structures. For guidance on those provisions, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment. Sukuk al ijara represents a specific category of sukuk. In a sukuk al ijara, the bond asset owned by the bond-issuer (the statutory term for the sukuk issuer) on trust for the sukuk investors (the certificate holders) is frequently real property. The issuer secures an interest in that property through a sale and leaseback—the sale and leaseback being the ijara. For reading, see Practice Notes: Sukuk al ijara—tax reliefs for sale and leaseback arrangements—What is sukuk al ijara?, The structure and elements of a Sukuk transaction and Islamic finance standard documentation in the context of real estate finance transactions. As a sukuk al ijara entails genuine land dealings, such an arrangement may give rise to or otherwise potentially lead to consequences to be considered under the arrangement, trigger...
Tax
PRACTICE NOTES
UK stamp duty and SDRT treatment of sukuk (AFIBs): issue and transfer, loan capital exemption, bearer/non-AFIB considerations, and securitisation relief
FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework:
In 2027, stamp duty and SDRT will be brought together as a single, self-assessed tax on securities—the securities transfer charge (STC)—to be paid and reported via a new online portal. The STC’s core features will broadly mirror the proposals consulted on in 2023. From Royal Assent, Finance Bill 2026 (FB 2026) will confer a power for secondary legislation, enabling taxpayers to trial the digital service, calculate their stamp taxes on securities liabilities themselves, and submit transaction details electronically.
For further detail on the modernisation of stamp taxes on securities, see:
News Analyses: Budget 2025—Tax analysis—Stamp and transfer taxes
Tax update spring 2025—Stamp taxes on shares modernisation
Tax update spring 2025—Tax analysis—Stamp and transfer taxes
TAMD 2023—Stamp taxes on shares modernisation
TAMD 2023—consultation—stamp taxes on shares
Tax Administration and Maintenance Day—27 April 2023—Stamp and transfer taxes
The government has also consulted on modernising and clarifying the legislation for the higher 1.5% stamp tax charge; however, no outcome to that consultation has yet been released...
Tax
PRACTICE NOTES
UK tax reliefs for sukuk al ijara sale and leaseback of land under FA 2009 Schedule 61: SDLT, CGT and capital allowances—structure, conditions and anti-avoidance
Sukuk (singular form: ‘sakk’)
Sukuk are Shari’a-compliant financing instruments, commonly described as Islamic certificates or bonds. For further detail, see Practice Notes: The structure and elements of a Sukuk transaction and Sukuk—investment bond arrangements and their UK direct tax treatment—What are sukuk? Where the statutory requirements are satisfied, sukuk can access the UK tax regime that applies to alternative finance investment bond (AFIB) arrangements. For guidance on those provisions, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment. A distinct variant is sukuk al ijara. In such structures, the bond-issuer (the legislative term for the sukuk issuer) typically holds land on trust for the certificate holders (the sukuk investors). The issuer secures a land interest through a sale and leaseback—the ijara element. For more detail, see Practice Notes: The structure and elements of a Sukuk transaction and Islamic finance standard documentation in the context of real estate finance transactions. The UK has issued sukuk al ijaras over land, most recently in March 2021. Since a sukuk al ijara entails actual...
Tax
PRACTICE NOTES
UK tax treatment of musharaka (diminishing shared ownership): corporation tax loan relationships, CGT (including FA 2025 refinancing relief), withholding tax, stamp duty/SDRT and VAT
Shari’a-compliant financing arrangements
Shari’a‑compliant financing arrangements (often described as Islamic financing) can be implemented in a range of formats. The UK has enacted dedicated provisions, termed the alternative finance arrangement rules, to address the direct tax treatment of specified Shari’a finance structures. These rules are intended to ensure that, for UK direct tax purposes, qualifying Shari’a finance is treated in the same way as a conventional loan. That outcome applies only where the financing arrangement satisfies the statutory conditions set out for alternative finance arrangements. At present, the regime encompasses five distinct categories of financing structures. By contrast, some parts of the tax code, such as VAT, have not introduced bespoke measures for Islamic finance. As a consequence, there can be uncertainty about the appropriate VAT treatment where the legal form diverges from the underlying substance, including situations in which Shari’a‑compliant finance is not treated in the same way as conventional finance. Accordingly, transactions may face uncertainty in VAT treatment where legal form and substance diverge. Notably, the direct tax rules on alternative finance are not limited to Islamic finance; non‑Shari’a structures could also potentially fall within their scope where the relevant statutory conditions are met...
Tax
PRACTICE NOTES
UK tax treatment of wakala profit-share agency arrangements: alternative finance rules, corporation tax, withholding, stamp taxes and VAT
Shari’a‑compliant finance arrangements (often referred to as Islamic finance arrangements) appear in several forms. The UK has enacted targeted provisions, called the alternative finance arrangement rules, to address the direct tax treatment of particular Shari’a finance structures. These UK rules are designed to ensure Shari’a‑compliant finance is, for UK direct tax, treated as if it were a standard loan. That outcome applies only where the arrangements meet the specific statutory conditions for alternative finance arrangements. At present, the rules extend to five distinct categories of financing. Certain parts of the tax code, such as VAT, have not created bespoke provisions for Islamic finance, which may give rise to uncertainty and to circumstances where Shari’a‑compliant finance is not aligned with the treatment of conventional finance. The direct tax regime for alternative finance arrangements is not confined solely to Islamic finance. Non‑Shari’a structures could also come within the ambit of these rules. Among the five alternative finance forms recognised in UK tax law is a profit share agency arrangement. In effect, the framework seeks neutrality between Islamic and conventional financing for direct taxes, while acknowledging that gaps remain elsewhere. Scope is, however, broader than Shari’a finance alone today.
Profit share agency arrangement...
Tax
PRACTICE NOTES
UK withholding tax: qualifying private placement exemption for unlisted loans and debt securities, section 888A ITA 2007 and SI 2015/2002: scope, conditions, creditor certificates, practical drafting points
Where no exemption or relief is available, UK‑sourced annual interest is subject to UK withholding tax at the basic rate (20%), moving to the savings basic rate (22%) from 6 April 2027. For further details, see Practice Note: UK withholding tax on yearly interest.
This Practice Note summarises the exemption from UK withholding tax that:
is set out in section 888A of the Income Tax Act 2007 (ITA 2007) and the Qualifying Private Placement Regulations 2015, SI 2015/2002 (QPP Regs)
has been in force since 1 January 2016
applies to interest paid:
by a corporate borrower on an unlisted security or loan that qualifies as a qualifying private placement (QPP), and is expected to apply to bond issues and bilateral and syndicated loans—see: What is a qualifying private placement? and Creditor certificates below
to a lender resident in a qualifying territory, namely the UK or certain tax treaty jurisdictions—see: Conditions relating to the creditor below
Given the existing UK to UK exemption from withholding tax for UK lenders, the QPP exemption is therefore likely to be of primary relevance to non‑UK lenders...
Tax
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