27 May 2021
Chalcot Training Limited V (1) Stoneman (2) HMRC; (Court of Appeal)
The issues were (1) whether arrangements made between a company and its two employed shareholder/directors with a view to avoiding tax amounted to the allotment of shares at a discount contrary to section 580 of the Companies Act 2006 and (2) whether the arrangements involved the payment of the company’s shares or capital money in consideration of an agreement to subscribe for shares contrary to section 552 of the Act.
The Court of Appeal dismissed the appeal. The judgment can be found here. In short the Court held that the relevant arrangements did not breach s 580 or s 552.
In light of the Court’s decision on those issues a potential third issue relating to mistake did not arise and the appellant company had not pursued another ground of appeal relating to whether the relevant payments should be characterised as remuneration or (unlawful) distributions.
Richard Vallat QC appeared for HMRC.
This content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of PCTC or by PCTC as a whole.
