Single composite transaction

Capital gains tax on disposal of trusts’ shareholdings

The appeal concerned a tax avoidance scheme to sell shareholdings in Scottish trusts without incurring capital gains tax. It entailed the setting up of Irish trusts the exercise of put options the purchase and sale of the shareholdings by the Irish trusts and the replacement of these trustees with the original ones under the Scottish trusts and the consequent repatriation of these trusts. The aim was to take advantage of TCGA 1992 s 144ZA. This disapplies the market rule for determining the consideration for the disposal of shares through an option.

The issue was whether the scheme should be treated as a single composite transaction for the disposal of the Scottish trusts’ shareholdings. Applying the Ramsay doctrine the question was therefore whether there had been an expectation that the scheme would be carried through in successive steps and...