Jurisdiction(s):
United Kingdom

UK Upper Tribunal: exit tax must allow five-year instalment deferral under EU freedom of establishment; statutory interest applies; Gallaher not followed (Panayi Trustees; Redevco v HMRC)

Published on: 15 October 2024

Published by a LexisNexis Tax expert

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Article summary

The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers to 4 and Redevco Properties UK1 Ltd v HMRC [2024] UKUT 319 (TCC)

In relation to the trustee appellant, the majority of the trustees of the relevant settlement ceased to be UK resident, instead becoming resident in Cyprus, in August 2004. The company appellant transferred its place of effective management to the Netherlands in January 2008. HMRC served closure notices on the appellants, including assessments under the exit charge provisions in the Taxation of Chargeable Gains Act 1992, ss 80 and 185 respectively. In the trustees’ case, the FTT sought a preliminary ruling from the Court of Justice of the European Union, which led to a CJEU judgment in September 2017 confirming that a trust could benefit from the four EU law freedoms and that imposing an immediate tax charge at the exit date was a disproportionate interference with freedom of establishment. The FTT determined that, notwithstanding the exit tax legislation applicable at the material times (and...

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