Gift of business asset to UK company by non-UK resident

The taxpayer a US citizen who was neither resident nor ordinarily resident in the UK gifted his interest in a limited liability partnership BlueCrest to WHR a UK incorporated and resident company of which he was the sole shareholder and director.

He claimed holdover relief but HMRC refused this on the basis that it was precluded by TCGA 1992 s 167(2) (gifts to foreign-controlled companies). Under a literal interpretation of s 167 although the taxpayer controlled WHR HMRC said TA 1988 s 416(6) attributed his control to his non-resident wife and children (as defined by s 417).

The taxpayer accepted that the literal wording precluded his claim but said this was an ‘absurd and arbitrary’ result. Instead a purposive interpretation should be adopted to allow it. Failing that relief should be allowed because such a restrictive interpretation did not conform...