In HMRC v Delinian Ltd (formerly Euromoney Institutional Investment plc) [2023] EWCA Civ 1281 (3 November 2023) the Court of Appeal dismissed HMRC’s appeal against the Upper Tribunal’s decision that the anti-avoidance rule in TCGA 1992 s 137(1) did not apply to a share exchange.
E plc sold its shares in a 50% subsidiary company to another company (DTL) controlled by an unconnected private equity group. The consideration of approximately $80m was satisfied by the issue of ordinary shares and 21m $1 redeemable preference shares in DTL. It had originally been intended that the transaction should be for a combination of ordinary shares and cash but E plc's tax director had suggested the substitution of the preference shares. In evidence he accepted that his intention was that the entire transaction should be treated as a share exchange under TCGA 1992 s 135 with no immediate tax charge. When...
