Legislation was introduced in 2000 to counter an avoidance device known as a 'flip-flop scheme'1. The provisions originally applied to both UK resident and non-resident settlements but they ceased to apply to UK resident settlements after 5 April 20082; they continue to apply to non-resident settlements.
The basic elements of the original flip-flop scheme were as follows3:
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(a)ÌýÌýÌýÌý a settlor would create two settlements, A and B, in which he had an interest and which both had identical beneficiaries
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(b)ÌýÌýÌýÌý assets which the settlor wished to sell were introduced into settlement A; this was a disposal at market value for him, but he could claim holdover relief, leaving the trustees with assets with unrealised gains
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(c)ÌýÌýÌýÌý in year 1:
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(i)ÌýÌýÌýÌý settlement A would borrow a sum secured on
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Web page updated on 17 Mar 2025 17:00