Holdover under s165 for settled property

does para 7 schedule 7 apply?

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The trustees of a settlement own 10% of the shares in a large unquoted trading group,  The group has some investment assets. Say 20%. s260 is not in point on the transfer, so consideration of s165.

On a gift, will para 7 sched 7 operate to reduce the gain heldover and keep 20% in charge?  On the face of it, no, because the trustees do not exercise 25% of the voting rights.  Correct?

Assume the shares in the company are owned, 40% by individuals, 60% by trustees.  The same body of trustees control holdings over three separate trusts.  Am I right in thinking the votes exercisable provision is then interpreted to combine the three trusts and deem the trustees to exercise control of 60% of votes, thereby bringing the para 7 restriction into play.  If so, could one simply change the trustees, have different trustees for each settlement and in due course make appointments without para 7 coming into play?  

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By chicken farmer
16th Mar 2018 18:17

S. 69(1) treats the trustees of a settlement as a single notional person distinct from the persons who may be trustees from time to time. So if you have 3 settlements I think you must have 3 notional persons involved.
Para 7 refers to the votes exercisable by the transferor which must mean the notional person acting as trustee for the settlement making the transfer. I do not see anything that would bring in the voting rights of any 'connected persons'. Even if it did would the three notional persons be connected within s. 286(3)?

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By dropoutguy
18th Mar 2018 14:55

Thank you. I had missed s69, though clearly shouldn't have.

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