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Georgia Owen

Investment company lose £1.65m trust tax case

Georgia Owen

13
Jun

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A fund manager has recently lost an appeal case over a tax bill worth £1.65 million.

Although it had been unsuccessful in its efforts, Henderson had tried to retrieve a stamp duty reserve tax charge from HM Revenue & Customs.

The appeal centred on a redemption in specie of all units held by a pension fund trustee in the Henderson UK Enhanced Equity Trust.

Henderson were claiming for relief on Schedule 19 stamp duty reserve tax. This can apply to unit trusts, for example, being awarded when the units are sold and subsequently issued to new investors.

However, HMRC objected to the claim, stating that the relief only applies if the allocation of assets received by the unit holder is proportionate to their share.

Of the trust’s value, the total interest of the pension fund trustee was 27.41.

In most cases, the securities received by the trustee in regard to redemption would be equivalent to 28.68% in interest. In addition, there would be an over-allocation of securities as well as an under-allocation of money.

Although it stated that an increase in cash may have been allocated to bring the interest closer to 27.41%, it stated that this was “very complicated” given the portion of positions being non-transferable.

Henderson’s appeal was dismissed by the Upper Tribunal in a decision last week.

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