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s455 work-around ...

does my logic hold?

Client Mr A buys B Ltd from a 3rd party. The buyout is over 12 months. The initial payment is part funded by A, part by cash in B Ltd. Future payments are all made from B Ltd's cash.

This has created a significant s455 liability; whilst the client understands the "the company's money isn't mine" principle, for some reason he's struggling with regards to a company purchase.

This has happened with multiple companies over the past year and will continue in the future.

Co-incidently, A also owns A Ltd, a UK holding company and A2 Ltd, a Malta holding company.


1. If A was replaced with A Ltd in the above scenario, presumably there'd just be a large intercompany with  no tax charge.

2. A is a domiciled non-resident and passes all of the UK ties tests. I can't see it anywhere in the guidance, but does his ownership of multiple UK companies (10 and counting) come into affect anywhere? NB he is a director of none, although it could easily be argued a shadow director of all of them.

3. Assuming #2 is still non-resi, can anyone think of a reason why he would own the shares personally, rather than through his UK (A Ltd) or Malta (A2 Ltd) holding companies?

4. Would you advise to hold the shares in the UK or Malta holdco?

Many thanks.


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By Ruddles
03rd Oct 2018 13:28

Regarding suggestion 1, although I disagree with them, HMRC consider that s459 might apply to such arrangements.

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to Ruddles
03rd Oct 2018 13:39

I see what you mean - the end of CTM61550 has a similar situation specifically mentioned.

But as with you, this must be one of their 'incorrect' guidances. Who are they to say whether its a company or individual who owns the shares (unless I've read their narrative incorrectly).

If A Ltd (and A2 Ltd) are pre-existing holding companies, then surely HMRC can't successfully argue s459 applies? Can they?

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By Ruddles
to atleastisoundknowledgable...
03rd Oct 2018 14:01

It makes no difference if the acquiring company is new or not, so HMRC could certainly argue the point. Whether or not they'd be successful is another matter.

Thanks (1)
03rd Oct 2018 13:39

P-L-A-N-N-I-N-G! Tell the client to find a competent adviser.

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to Portia Nina Levin
03rd Oct 2018 18:10


Helpful as ever.

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