Home › Forums › Patrick Cannon › When can s27(3)(c) FA 1967 apply to block stamp duty group relief?
- This topic has 3 replies, 1 voice, and was last updated 15th April 2018 at 9:07 am by Patrick.
My question relates to a purchase of own shares by a UK private company limited by shares (Co. A). Currently Co. A has 2 shareholders, one is a UK Ltd (Co. B) the other is an overseas body corporate (Co. C). All entities are under common control (100% owned subsidiaries of a UK PLC). The plan is for Co. A to purchase all the shares owned by Co. C. Consideration is also being given to a future strike-off of Co. A. Given the broad definition of ‘arrangements’ any planned strike-off could fall within the scope of s27(3)(c) FA 1967 (Co. A and Co. C cease to be associated when Co. A is struck off the register) preventing a s42 claim. Co. A’s only assets are cash and receivables which would be distributed to its parent (Co. B) prior to strike-off. I understand s27(3)(c) is an anti-avoidance provision designed to tackle enveloping and wondered if there is an argument which could be run that s42 should still apply? Any thoughts/experience you can share would be greatly appreciated.PatrickGuest
Phil, as long as there are no arrangements for the cash and receivables of Co A to move from Co B outside the group then it seems to me that there is no mischief here. As a precaution you should do as much as you can to avoid the existence of any arrangments for the striking off of Co A at the time of the buy-back but it looks ok. It would be good to have cleared this with the Stamp Office but you may risk shaking a hornets’ nest by seeking a clearance as they often get the wrong end of the stick and won’t let go.Phil RGuest
Many thanks Patrick. I have prepared a a request for an informal opinion from the stamp office. Provided the stamp office have scope to apply a purposive interpretation of s27(3) then I think it should be ok. Do I need to make a provisional s42 claim or can I simply request an opinion on the specific area of uncertainty setting out the relevant facts?PatrickGuest
I would put in the s42 application in the usual way and refer to the situation but say that in your opinion the anti-avoidance provision does not apply and leave it to HMRC to decide their position.