SDLTM09380 | Example 1 – company purchase and de-envelope

(This example was introduced on 14 May 2021)

Todderick purchases all of the issued shares in Galactus Five Limited, which has held three properties located in London for many years. The properties are not subject to any debt at the time Todderick acquires the company.

Once the company is in his ownership, Todderick distributes the properties and they move into his direct ownership. No further transactions happen or are planned, and Galactus Five Limited remains dormant.

Section 75A would not be engaged here. The first transaction, which is the acquisition of shares by Todderick would be the first scheme transaction, but it is ignored for the purposes of Section 75A owing to Section 75C(1). By ignoring the first transaction, there is only one other transaction of relevance – the distribution of the properties. Therefore, the test at s75A(1)(b) is not met as there are not a ‘number of transactions’ involved in connection with the disposal and acquisition of the properties.