Market leading insight for tax experts
View online issue

The Union Castle Mail Steamship Company v HMRC

In The Union Castle Mail Steamship Company v HMRC [2018] UKUT 316 (2 October 2018) the UT found that a loss triggered by the derecognition of derivative contracts did not ‘arise from’ derivative contracts.

Union Castle held put options and put spreads (the ‘Contracts’). It wished to novate the Contracts to its parent Caledonia but wanted to avoid the related tax charge. Instead Union Castle made a bonus issue of A Shares which carried a right to receive a dividend equal to 95% of the cash flows arising on the close-out of the Contracts thereby effectively transferring the economic ownership of the Contracts to Caledonia. Following the issue Union Castle derecognised 95% of the value of the Contracts. HMRC had disallowed the loss claimed by Union Castle in relation to the derecognition under FA 2002 Sch 26 para 15.

The UT observed that the right approach...

If you or your firm subscribes to, please click the login box below:

If you do not subscribe but are a registered user, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this article in full.
Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.