Davies (Inspector of Taxes) v Hicks: ChD 12 May 2005

The taxpayer use a bed and breakfast arrangement with a trust based in Mauritius, taking advantage of the double taxation agreement with that country. The shares were transferred into a discretionary trust. When the shares increased in value they were sold, and on that day the trustees retired, to be replaced by the trust company in Mauritius.
Held: At the time of the sale, the assets in the trust were cash, and exempt from capital gains tax. On the following day, the trust purchased equivalent shareholdings with the cash. Section 106A was purely computational, and could not be used by the revenue to translate the cash back into shares. It had to be used instead to match the shares acquired with those disposed on the next in first out basis. No chargeable gain was deemed to have accrued.


Park J


Times 27-May-2005


Taxation of Capital Gains Act 1992


England and Wales


Appeal fromHicks v Davies (HM Inspector of Taxes) SCIT 16-Nov-2004
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Capital Gains Tax

Updated: 27 June 2022; Ref: scu.225373