[2024] UKUT 00319 (TCC)

These appeals concern the “exit tax” that arises on a deemed disposal when the trustees of a settlement or a company cease to be resident in the UK for the purposes of taxation.

In the case of the trustees of The Panico Panayi Accumulation and Maintenance Settlements Numbers 1 to 4 (“the Trustees”), the majority of the Trustees ceased to be resident in the UK and became resident in Cyprus with effect from 19 August 2004. In the case of Redevco Properties UK1 Limited (“Redevco”), its place of effective management moved to the Netherlands on 15 January 2008.

In the case of the Trustees, HMRC issued a closure notice, amending the Trustees’ 2004/5 tax return, on the basis that they are liable to capital gains tax under s80, Taxation of Chargeable Gains Act 1992 (“TCGA”). In the case of Redevco, HMRC issued a closure notice in respect of its accounting period ended on 15 January 2008 on the basis that it is liable to corporation tax under s185 TCGA, paragraph 10A of Schedule 9, Finance Act 1996 (“para 10A”), and Part 2, Capital Allowances Act 2001 (Footnote: ¹).

For convenience, unless the context otherwise requires, in this decision references to:

At the hearing, the Trustees were represented by Mr Johnston and Redevco was represented by Mr Margolin. In respect of the Trustees’ appeal, HMRC were represented by Mr Bremner and Mr Elliott. However, in respect of the Redevco appeal, HMRC were represented by Mr Elliott alone.

Counsel for the parties made helpful submissions for which we are grateful. We have carefully considered these in reaching our decision, but in so doing have not found it necessary to refer to each and every argument advanced by them on behalf of their respective clients nor to all of the authorities cited.