What are the facts of the case?
HMRC v Sehgal [2024] UKUT 00074 (TCC) concerned complicated transactions entered into by two UK resident non-UK domiciled taxpayers for the sale of shares in Visage Group Ltd (VGL) to Centennial (Luxembourg) Sarl (Centennial) a subsidiary of Li & Fung Group (L&F). At the time of the sale VGL was owed approximately £6m by Internacionale Retail Ltd (IR) a company indirectly beneficially owned by the taxpayers. IR was a subsidiary of SKS1 Ltd (SKS).
The taxpayers entered into a share purchase agreement with Centennial and indemnified Centennial against losses arising out of any failure by IR to pay its debt. After the sale was completed it became clear that IR’s debt could not be recovered triggering the indemnity. L&F requested that the taxpayers’ obligations be discharged in a way that would not create any charge to profits....
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