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Clipperton and another v HMRC

In Clipperton and another v HMRC [2021] UKFTT 12 (TC) (20 January 2021) the First-tier Tribunal found that payments made under a ‘dividend replacement scheme’ were applying a purposive construction following Ramsay distributions under CTA 2010 s 100 and that the settlements legislation (ITTOIA 2005 Part 5 Chapter 5) did not apply (as the declaration of trust was to be ignored).

The case involved a scheme designed to enable a company (WY) to put sums into the hands of its shareholders without attracting the income tax charge usually applicable to dividends. A subsidiary (WS) was created in which WY subscribed for 199 A shares and 1 B share. The B share was then settled on trust for the benefit of the shareholders. WY retained an interest in the settlement in that it was entitled to receive a small amount of any income arising and the trust property...

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