Good day everyone,
I wonder if I might be able to pick the collective knowledge, please, in relation to Entrepreneurs’ Relief and the interpretation of s169 TCGA 1992 when it comes to trustees.
Transaction in January 2016 at which time our profession seemed content that a life tenant could be parachuted into a discretionary trust to secure ER on the sale of an otherwise qualifying asset, with the interpretation suggesting there was no minimum period during which the life interest must exist etc.
Tax return reporting the transaction in question was submitted to HMRC on 17 January 2017 with ER being claimed.
On 12 January 2017 the Capital Taxes Liaison Group held a meeting at which, inter alia, the interpretation of s169 TCGA 1992 was discussed, HMRC seemingly acknowledging the parachute option as one of the attendees from HMRC “confirmed that it no longer reflected HMRC’s position (if it ever truly did) and he would ask technical colleagues to withdraw that advice and clarify the position. There was discussion as to the need for HMRC to specify an effective date from which the corrected interpretation would apply to disposals”.
I am unsighted as to when the minutes of the Capital Taxes Liaison Group’s 12 January 2017 meeting were released, but I imagine it was sometime after 17 January 2017 and therefore I have no issue with the tax return being filed by reference to what seemed to be prevailing practice.
Notes to a later meeting of the Capital Taxes Liaison Group state that “if a customer or agent believes they have been disadvantaged by relying on the sections 169J and 169O implicit in the 2011 letter then HMRC will consider representations and evidence to that effect".
Long story short, HMRC has enquired and disagreed with our position and interpretation, they’ve issued a closure notice against which we appealed and we asked for an independent review, which has found in HMRC’s favour, so we’re now looking at the possibility of a tribunal hearing, as to which:
- Is anyone else’s client(s) subject to the same enquiry and, if so, how’re you getting on?
- Is anyone aware of a case on the same point making its way towards tribunal in the near future?
- Does anyone have a view as to whether HMRC’s interpretation is the correct one, that is the qualifying beneficiary must be I place for 12 months rather than being parachuted in last minute?
Thanks in anticipation.
Best regards, A