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 ?
- Recommendation for a good website on exchange rate forecast 94 6
- Year end 327 4
- Test purchases in VAT enquiries 179 3
- Comments on this scenario 44 1
- Related Parties Note 405 9
- Annual Investment Allowance (AIA) 53 1
- Where can I get Quickbooks help 113 4
- Have i messed up? 579 9
- loss on carbon credits 92 2
- New HMRC phone answering method ... 544 9
- SAGE con 171 3
- Dazed & confused 146 2
- Goodwill ammortisation 229 2
- Overpayment relief claim 117 4
- How to prepare and Finalize Vat company accounts 223 9
- Concerned about RTI 2014 2,529 63
- Sage 50 Accounts - Opening Bank Account Balance Posted to Nominal 9998 Suspense Account 508 28
- Charity reserves 115 2
- Aggressive HMRC 1,512 16
- Aweb Fantasy Practice 1,254 19
- Desperately seeking Susan, Sam or anyone with any other name 1,001
- Experience with Islamic investor following Sharia-compliant rules? 541
- Darwinpay Partnership Assessment 359
- Tax efficient holding company structure 286
- S464A Charge to tax: conferring benefit & BIK 271
- auto enrolment - calculation of first pension deduction 209
- Charge out rates in London? 206
- Pension contributions higher rate extension? 180
- Personal consumption by landlord 178
- Interest on Loan to a Company 170