In light of the Upper Tribunal’s recent decision which took a restrictive view of the substantial shareholding exemption rules, a change to the legislation is now required, writes Alistair Godwin (EY).
The recent decision of the Upper Tribunal (UT) in M Group Holdings Ltd v HMRC [2023] UKUT 213 concerns the application of TCGA 1992 Sch 7AC para 15A of the substantial shareholding exemption (SSE) rules to business disposals structured as a hive-down and sale.
This is a common M&A transaction structure for divisionalised businesses (i.e. businesses with commercially separate divisions housed within a single company) looking to divest themselves of a specific business division to a third-party in a manner that largely achieves tax neutrality for the seller. The structure comprises three steps:
The seller incorporates a new company (Newco) either as a subsidiary or otherwise within the same chargeable gains group.
Shortly afterwards ...
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In light of the Upper Tribunal’s recent decision which took a restrictive view of the substantial shareholding exemption rules, a change to the legislation is now required, writes Alistair Godwin (EY).
The recent decision of the Upper Tribunal (UT) in M Group Holdings Ltd v HMRC [2023] UKUT 213 concerns the application of TCGA 1992 Sch 7AC para 15A of the substantial shareholding exemption (SSE) rules to business disposals structured as a hive-down and sale.
This is a common M&A transaction structure for divisionalised businesses (i.e. businesses with commercially separate divisions housed within a single company) looking to divest themselves of a specific business division to a third-party in a manner that largely achieves tax neutrality for the seller. The structure comprises three steps:
The seller incorporates a new company (Newco) either as a subsidiary or otherwise within the same chargeable gains group.
Shortly afterwards ...
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:
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