Group for relief purposes

The taxpayer companies sold two retail parks in 2006 to a member of the British Land group. The transactions were devised to avoid corporation tax on chargeable gains on the disposal using the group relief provisions.

The taxpayers claimed they were members of the British Land group of companies when the sale took place making it an intragroup transfer with no gain and no loss arising (TCGA 1992 s 171). They reported the arrangement under the disclosure of tax avoidance schemes provisions.

HMRC disagreed with the claim and charged corporation tax on the gain.

The department’s argument was group relief provisions recognised real groups. The existence of the options that formed part of the sales arrangements resulted in the group being only temporary.

The taxpayers appealed.

The First-tier Tribunal said the sole reason for entering into the corporate transactions was tax avoidance. They would not have taken...