Wednesday 18 October 2023
By Appellant’s Notice filed on 12 October 2022, HMRC appeal the decision of the Upper Tribunal dated 29 July 2022.
Background – The taxpayer company (“Euromoney”) agreed in principle to transfer its shares in a company (“CDL”) to an acquiring company (“DTL”) for a total consideration valued at $80.44 million, of which some $21 million consisted of cash and the remainder consisted of ordinary shares in DTL. After striking that commercial deal, it realised that it would be more tax efficient if it received some $21 million worth of redeemable preference shares in DTL (“Preference Shares”) instead of the cash consideration as no tax charge would arise on redemption of such Preference Shares whereas it would arise on a receipt of cash. Therefore, Euromoney renegotiated the commercial deal so that it exchanged its CDL shares for a combination of ordinary shares and Preference Shares. In due course the Preference Shares were redeemed giving Euromoney the tax-free receipt that it sought.
The question raised by this appeal is whether the exchange formed part of a scheme or arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to corporation tax.