A large company involved in the exploration, development, production and transportation of oil and gas was disposing of its shareholding in a UK subsidiary which they acquired in 2012. The advisors were advising on whether SSE would apply to the disposal. Separately, following the acquisition in 2012, various disputes arose between the sellers and the initial purchaser and the initial purchaser received a large sum of money under a settlement agreement.

The issue arose as to whether the monies received by the purchaser under the settlement agreement would be subject to corporate tax on the gain if it is treated as the disposal of a “right in action” and whether SSE would apply on the gain.

An insurance policy was issued to give protection against denial of SSE and in the event the settlement proceeds were subject to corporation tax.