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The appellant bought the loan stock of W and shares for a nominal amount and sold them to T, a company owned by the appellant. T made loans to W, and these were used to repay some of W’s loan stock to the appellant. Subsequently, T transferred its trade and assets to W at book value, and ceased trading.
HMRC issued assessments under TA 1988, s 703 on the basis that the appellant had obtained a tax advantage by way of a transaction in securities.
After a detailed review of the evidence, the First-tier Tribunal concluded that the assets representing profits made by W after the transfer of trade were not assets that would have been available to T for distribution.
The appeal was allowed in respect of the profits made by W after the transfer.
The appeal was allowed in part.
