Capital gains tax on sale of shares
One of the conditions for claiming ER is that the taxpayer (T) was employed or an officer throught out one year prior to the disposal of the shares. This is the wording in the article Entrepreneurs' Relief - what you need to know and which I presume is the same as the wording in the statute itself.
In this case T sold shares in a private company generating a CGT liability of over £90K. He qualifies in all respects for ER with the one exception that he had resigned frombeing a director and company secretary approximately 2.5 years prior to the date when he was paid for the shares.
The background is that T was a member of a family which in 2004 started up a company engaged in food manufacture. The company did well but during ensuing years was alwys short of cash. In 2006 an outside interest (OI) purchased shares in the company, injecting capital. By 2008 as the result of rights issues OI had become the majority shareholder. In 2009 by a further rights issue and an accompanying shareholders agreement OI gained total control. OI required T to resign from his posts. At that point T started negotiations with OI to purchase all his shares and this concluded with payment for the shares in Feb 2012.
In principle this seems an obvious case qualifying for ER. i.e. to encourage business enterprise.
Much depends on the interpretation of the words I have referred to "throughout one year prior to the disposal of shares ......" It does not say "throughout one year ending with the date of the disposal of shares..." Furthermore the words "disposal of shares" does not say the "date of disposal of shares". "Disposal" could mean the whole gamut of the prior negotiations as well. Of course, there could be a misquote above but if not there seems to be an ambiguity which by law has to be interpreted in favour of the taxpayer I believe.
Another possibility is that the associated disposal rules might be invoked here.
Any thoughts ?
- How could I be identified for VAT purposes in UK? 397 7
- vat help for catering concession 262 10
- Accounts production software license expiry & possible alternatives 263 5
- IHT dilemma 1,143 17
- Tax return software for remote working 210 3
- Recharge for private use of a company car 331 7
- Are clients getting more stupid? 1,182 19
- CGT 319 14
- Problems with Sage 50 Payroll v21(2015) pension module 304 1
- Interest paid to non-UK company - Deduction 97 2
- Compliance check 486 13
- sole trader accountant 757 14
- Entrepreneurs Relief 391 15
- Capital Allowances and Building Improvements 599 21
- More AE! 480 11
- How to classify an asset 141 3
- Ceasing in membership of ATT 270 2
- when a charity makes a donation.... 174 4
- EU eservices VAT change imminent 120 2
- Statement of turnover template 182 4
- Auto enrolment excuses 1,069
- Feedback on accounts production software for IFRS 776
- Add T&Cs to Sales Order in Sage 456
- Digita Hosted Software 277
- Call Centre Data Costs 246
- Are any of you agents for doctors? 212
- Credit where credit's due....... 205
- Buying goods in US and selling them to company in US 196
- Married Couples Allowance wasted? 180
- Director phone costs 138