News - tax case

Indirect receipt

In 1990 a husband created a non-resident settlement of which his family were beneficiaries. By 1998 the stockpiled gains were £2 million. In an attempt to mitigate the capital gains tax on the gains the taxpayer implemented a tax avoidance scheme known as a Mark II flip flop as follows. On 4 February 2002 the husband created a UK resident settlement of which he and his wife were the beneficiaries and trustees. On 20 February the trustees of the family settlement i.e. the non-resident settlement having borrowed money and bought a holding of Treasury stock appointed the stock cash and an unsecured loan from the husband to the trustees of the personal settlement i.e. the UK settlement. Finally on 23 March 2002 the trustees of the personal settlement appointed all the trust assets to the...