Hi all, would be grateful if anyone can confirm my understanding of this, or explain otherwise...
I have a client who's been offered a very good price to sell his business, still at early negotiation stages but advanced planning is never a bad thing.
Two director/Shareholders, nominal £1 each, co incorporated March 2005 but did not start trading until October 2006. What is the qualifying period for taper relief - 2 full years from March 05 attracting the full 75%? Or is this likely to be restricted as the company wasn't trading before then?
To shed a little more light, the two directors have the same shareholding in another company incorporated Sept 2003 - this company traded from sept 03 to Sept 06. This company ceased trading as the new company started trading - the directors set up this company themselves as they wanted to change the name.
Are there any tax planning opportunities here?
Approx £300k gain each director.
Thanks in advance for any replies.
Louise Procter
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Replies (2)
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Not on the clock
I reckon the main point has cropped up quite a few times in this forum.
October 2006 looks to be the start date for BATR and the previous period from March 2005 is simply ignored because the company was close and (assumed ) inactive. I agree with the previous responder that something like R and D could get the taper clock running earlier because the word "trading " is not used in the legislation.
As for the other company: what is it you have in mind ? A transfer of the trading entity's business to it so as restart the clock on the relevant shares, which will become the subject of the disposal ?
Something like this should be reviewed very carefully : the two companies are connected and CT (CGT) problems could be created big time on asset transfers.