Q&A: The Clipperton saga

The latest instalment in the saga of S Clipperton and another v CRC [2024] EWCA Civ 180 decided by the Court of Appeal (CoA) on 29 February 2024 has provided further insight into application of the Ramsay principle and the meaning of ‘distribution … in respect of shares’.

What are the facts of this case?

The appellants (AP) Sharon Clipperton and Steven Lloyd were the directors and 50% shareholders of a company (TopCo). In 2012 they participated in a marketed tax avoidance scheme named ‘Aikido’ that purported to allow for the extraction of dividends from a company without a charge to income tax arising on individual shareholders.

Broadly the scheme sought to exploit the ‘settlements code’ at ITTOIA 2005 Part 5 Chapter 5 by:

1. Incorporating a company (NewCo) with 199 ‘A’ shares issued to TopCo and 1 ‘B’ share...