In Bupa Insurance v HMRC (FTC/27/2013 – 16 June 2014) the UT held that distributions subject to an earn-out remained in the beneficial entitlement of their holder.
Under a share purchase agreement Bupa (the purchaser) was obliged to pay to Tawa (the vendor) an amount equal to any distribution as ‘earn-out consideration’. The issue was therefore whether Bupa was beneficially entitled to the distributions for consortium relief purposes (ICTA 1988 s 403C).
The UT observed that the beneficial entitlement referred to in s 403C could be held both directly and indirectly via another body corporate. This showed that ‘beneficial entitlement’ was a wider concept than ‘equitable ownership’. The ‘more than a mere legal shell’ test applied to ascertain whether there was a ‘beneficial’ right of ownership.
The UT observed that Bupa did not hold the distributions as constructive trustee and had...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
In Bupa Insurance v HMRC (FTC/27/2013 – 16 June 2014) the UT held that distributions subject to an earn-out remained in the beneficial entitlement of their holder.
Under a share purchase agreement Bupa (the purchaser) was obliged to pay to Tawa (the vendor) an amount equal to any distribution as ‘earn-out consideration’. The issue was therefore whether Bupa was beneficially entitled to the distributions for consortium relief purposes (ICTA 1988 s 403C).
The UT observed that the beneficial entitlement referred to in s 403C could be held both directly and indirectly via another body corporate. This showed that ‘beneficial entitlement’ was a wider concept than ‘equitable ownership’. The ‘more than a mere legal shell’ test applied to ascertain whether there was a ‘beneficial’ right of ownership.
The UT observed that Bupa did not hold the distributions as constructive trustee and had...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
