In M Group Holdings Ltd v HMRC [2023] UKUT 213 (TCC) (31 August 2023) the Upper Tribunal (UT) dismissed the company’s appeal against the FTT’s decision that the substantial shareholding exemption (SSE) was not available on the disposal of a subsidiary which the taxpayer company (M Ltd) had owned for only 11 months. As M Ltd had not previously had any subsidiaries the extension to the SSE provided by TCGA 1992 Sch 7AC para 15A (for cases where there has been a transfer of trading assets within a group) did not apply.
M Ltd was wholly owned by one shareholder Mr J which provided services to the NHS. Mr J wished to sell the company's business and undertook the following transactions. Firstly the company incorporated a wholly-owned subsidiary MCS Ltd and then transferred its trade and assets to it. M Ltd then sold its...
