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.
England and Wales
Appeal from – Hicks v Davies (HM Inspector of Taxes) SCIT 16-Nov-2004
Lists of cited by and citing cases may be incomplete.
Capital Gains Tax
Updated: 27 June 2022; Ref: scu.225373