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Loan to purchase shares from spouse

Loan to purchase shares from spouse

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I have an interesting scenario that I cannot find a downside to.

H & W both work in company.  W re-mortgages the house to puchase H's shares.  W is then entitled to tax relief on the loan interest. H then pays off the original mortgage (not the re-mortgaged part).  The result is tax relief on the loan equivalent to the mortgage.

I've looked through HMRC's SAIM manual and ITA2007 and feel like there should be anti-avoidance but cannot find any.

Any opinions would be appreciated. 

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By BKD
07th Oct 2013 13:09

Just off the top of my head ...

Furniss v Dawson?

GAAR?

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By Steve Kesby
07th Oct 2013 13:19

It also sounds like...

... it would get caught by S. 384A which denies relief if all things remain equal but less tax is paid by the individual and persons connected with them. It's dealt with in SAIM10100, which has been withheld under the FOIA 2000 exemption of being likely to be prejudicial to the public interest.

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