Let us say that my client is coming home to the UK in two weeks after ten years away and has an investment property. ESC D2 would surely apply if the property was sold before return but that is not practical because it is too late to make an arm's length sale to a third party. Could a settlor-interested trust be set up and the property given to that? This would certainly trigger a disposal and the gain would under the ESC not be chargeable. The settlor would be chargeable on the trustees' gains but those would be measured — on a future disposal — from the entry into the trust not from the original purchase.
To me this seems to work; but the question is whether HMRC would see this as the sort of tax avoidance that would entitle them not to apply...
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