Court confirms sub-sale scheme is ineffective

The taxpayers acquired a property using an arrangement under which it was sold to a company set up by the taxpayers and in which they had subscribed for shares. The company then transferred the property to the taxpayers as a distribution in specie. The aim was to take advantage of sub-sale relief (FA 2003 s 45) - the taxpayers said no stamp duty land tax was due because the first sale should be disregarded and no chargeable consideration had been given for the transfer of the property to them. HMRC disagreed.

The First-tier Tribunal and Upper Tribunal dismissed the taxpayer’s appeal.

The Court of Appeal supported HMRC. Lord Justice Lewison who delivered the judgment said it was necessary to take a purposive approach and look at the scheme as a whole. Here the facts involved the provision of funds to a wholly owned vehicle for the sole...