A little laconic

THE PURPOSE OF TCGA 1992 s 106A is — as is probably well-known — to prevent capital gains tax advantages being obtained from 'bed and breakfast' transactions; that is capital gains or losses being crystallised at convenient points but such that the shareholding before and after remains substantially the same.

In the autumn of 2000 Mr Hicks transferred 100 000 shares in AIT into two settlements and held over the gain. Shortly afterwards the UK trustees of the settlements sold the shares. The following day the UK trustees retired and new trustees — resident in Mauritius — were appointed. They immediately repurchased as many of the same class of shares as the net proceeds of the previous sale allowed. (The double taxation agreement with Mauritius has since been changed.)

The tax returns of the settlements stated that no capital gains arose because the consideration...