B Share Scheme fails – Clipperton v HMRC

Aparna Nathan KC (leading Laura Poots of Pump Court Tax Chambers) successfully argued, in relation to a scheme marketed to directors and shareholders of owner managed companies as a dividend replacement strategy, that, applying the Ramsay approach to statutory construction to the dividend/ distributions legislation at s383 et seq ITTOIA 2005, the sums received by the directors and shareholders constituted a dividend or distribution under s383 ITTOIA in respect of which the Appellants’ were chargeable.

The Court of Appeal considered it unnecessary to determine whether, in the alternative, the arrangements were caught by the Income Tax Settlements legislation at ss619 et seq. ITTOIA 2005. The Upper Tribunal had held, applying the Settlements legislation, that the income arising under the arrangements was attributable to the Appellants as settlors of a settlement.

The Court of Appeal also considered the interaction of the dividend/ distribution provisions with the Settlements provisions.

The full decision can be found here.

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