Jurisdiction(s):
United Kingdom

EWCA confirms Ramsay applies to SDLT: sub-sale scheme fails; taxpayers indirectly provided consideration under FA 2003 s 45, or as connected persons (Brown v HMRC [2024] EWCA Civ 92)

Published on: 15 February 2024

Published by a LexisNexis Tax expert

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Article summary

Brown and another v HMRC [2024] EWCA Civ 92

The arrangement in question comprised the following pre-arranged steps:

the taxpayers incorporated an unlimited company
the taxpayers contributed cash of an amount sufficient to fund the purchase by taking up shares and promissory notes in the company
at completion:
- the company paid the vendors the agreed purchase price for the property and thereby acquired the property,
- at the same time, the company reduced its capital and made a distribution in specie of the property to the taxpayers

The scheme was promoted on the footing that, as a consequence of these steps, no SDLT arose on the acquisition of the property:

by the company on its purchase from the vendors, because the then sub-sale rules in FA 2003, s 45 meant the contract between vendor and company should be ignored and disregarded, and
by the taxpayers on the transfer from the company, as there was no consideration provided at all for the in specie distribution

Under the sub-sale relief provisions then in force, the taxpayers were only liable for SDLT if any of the...

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