Following the CJEU’s judgment in the Panayi case (Case C-646/15), the government has brought forward draft legislation in Finance (No. 3) Bill 2018/19 enabling a limited tax deferral where a CGT charge arises on ceasing UK residence. The legislation is surprisingly cumbersome and contains several possible bear traps. Whilst the new regime may suffice for some taxpayers, its restrictive terms may cause others to consider whether the proposals adequately give effect to the UK’s obligations (or could be construed to so comply), and so whether tax might not be due at all on a relevant exit. The prospect of Brexit further muddies the water, of course. Affected taxpayers will inevitably need careful advice to navigate these legal rapids and shallows.
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