A round up of other news this week.
In a Written Ministerial Statement (WMS) made on 1 May 2018, Sir Alan Duncan (Minister of State for Foreign and Commonwealth Affairs), again highlighted the UK as the international leader on setting high standards for transparency on beneficial ownership, reiterating a commitment that the Government will “use its best endeavours, diplomatically and with international partners, including through multilateral fora (such as the G20, FATF and the OECD), to promote public registers of company beneficial ownership as the global standard by 2023.”
In a recent joined decision, the First-tier Tribunal has ruled in favour of HMRC, finding that the taxpayers owed SDLT in respect of properties purchased as part of a marketed arrangement which sought to avoid SDLT. The purchases of the properties were made by companies limited by guarantee, funded by share subscriptions by individuals. Immediately after completion the properties were distributed to the individuals on a reduction of capital by the companies. This way, the taxpayers argued, no SDLT was payable due to a combination of sub-sale relief and an exemption for distributions. The FTT held that the individuals were subject to SDLT on the consideration paid for the shares. The reasoning is based on a statutory provision that has since been amended. It charged tax on a deemed contract based on consideration given indirectly by a connected person. In a re-run of a substantially similar SDLT appeal, the tribunal accepted HMRC’s argument that the cash paid for shares was, on the facts, consideration given indirectly for the property. The definition of ‘chargeable consideration’ for SDLT purposes uses similar wording. The decision begs the question: will a court or tribunal apply the same reasoning to deem cash paid for shares to be indirect consideration for a property on a distribution in a non-avoidance context? Those contemplating making corporate reorganisations involving distributing real property in specie should seek specialist advice before proceeding.
A number of pieces of guidance on Welsh taxation have been released by the Welsh Revenue Authority:
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James Stewart, Vice Chair of KPMG in the UK, comments on the latest artificial intelligence (AI) deal announced by the UK Government and why it is vital to secure the UK’s place as a world leader in AI and seize the opportunities it presents.
KPMG in the UK’s chief economist writes about the disappointing Q1 GDP growth of only 0.1 percent which is attributed to the unseasonably cold weather in February and March.