HMRC have provided details of their current approach to clearance requests involving distributions in a winding up.
Clause 35 Finance Bill 2016 introduces a new targeted anti-avoidance rule (TAAR) for certain distributions made on a winding up.
ATT have made various representations about the new clause. In particular, we have expressed concern about the imprecision of the terminology in Condition C (the same or similar trade or activity test) and the absence of any clearance procedure. For full details of our representations, please see: https://www.att.org.uk/technical/submissions/finance-bill-2016-clause-35-att-written-evidence.
HMRC have now advised that they have started to receive a number of clearance requests from taxpayers, despite there being no statutory clearance procedure under the new legislation. HMRC have confirmed that it is not their general practice to offer clearances on recently introduced legislation with a purpose test. However, they say that they recognise that this may cause some difficulty for taxpayers, particularly in the absence of guidance.
They have therefore drafted the attached standard reply that they will be using for all such requests for clearance which explains their position, but also tries to expand on their view of how the new rules work. They have also included a small number of examples. They say that this is not meant to replace the guidance, which they are still working on, but will hopefully be a useful aide memoire in the interim. We understand that the guidance, which should be published before the end of this year, will be much more detailed and will use more examples.