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Misunderstanding purpose in Osmond and Allen

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The FTT in Osmond and Allen dismissed the taxpayer’s appeal in relation to the Transactions in Securities charge, finding a main purpose of obtaining an income tax advantage even though they were trying to avoid paying CGT. This misunderstands the test and is an example of a mistaken approach to anti-avoidance provisions seen in other cases. HMRC sometimes seek to avoid the factual difficulties with subjective purpose tests by arguing that a transaction fails them as a matter of definition, but this misunderstands how anti-avoidance provisions relate to the underlying tax legislation. The decision should hopefully be overturned.

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