Trust must pay exit tax despite UK law’s EU-incompatible provisions. The Upper Tax Tribunal upheld the decision requiring a trust that moved from the UK to Cyprus in 2004 to pay an exit tax on its assets, despite UK capital gains tax (CGT) law at the time conflicting with European Union (EU) law. The tribunal clarified that the infringement was due to the UK’s failure to allow deferred tax payments. To remedy this, the trust was permitted to pay the tax in five annual installments, even though UK legislation didn’t initially provide for such a deferral (Trustees of the Panico Panayi Accumulation And Maintenance Settlements and Redevco Properties v HMRC, 2024 UKUT 00319 TCC).
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