Court of Appeal confirms that dividend replacement scheme failed.
In S Clipperton and another v HMRC [2024] EWCA Civ 180 (29 February 2024) the Court of Appeal (CA) upheld the decision of the Upper Tribunal (UT) that a marketed avoidance scheme designed to enable the owners of a company to extract funds from it without incurring an income tax charge did not work.
Under the scheme known as ‘Aikido’ the taxpayers’ company WY incorporated a subsidiary (WS) which issued A shares and a B share. WY settled the B share into a trust in which WY retained an interest and an amount would be paid to charity but the primary beneficiaries were the two shareholders. WY subscribed for a further WS A share at a significant premium and WS carried out a reduction of capital creating distributable reserves. The effect of the arrangements was...
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Court of Appeal confirms that dividend replacement scheme failed.
In S Clipperton and another v HMRC [2024] EWCA Civ 180 (29 February 2024) the Court of Appeal (CA) upheld the decision of the Upper Tribunal (UT) that a marketed avoidance scheme designed to enable the owners of a company to extract funds from it without incurring an income tax charge did not work.
Under the scheme known as ‘Aikido’ the taxpayers’ company WY incorporated a subsidiary (WS) which issued A shares and a B share. WY settled the B share into a trust in which WY retained an interest and an amount would be paid to charity but the primary beneficiaries were the two shareholders. WY subscribed for a further WS A share at a significant premium and WS carried out a reduction of capital creating distributable reserves. The effect of the arrangements was...
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