CGT/Entrepreneur's Relief - Sale of shares to connected company

Posted by secondhand_22 PM | on Mon, 25/02/2013 - 14:01 489 11 comments | report

A Limited is owned by Mr A

B Limited is owned by Mr B

They want to bring their business interests together. Let's say Newco (owned 50:50 each) is formed and purchases the A Ltd and B Ltd shares from Mr A and Mr B. So Newco will own A Ltd and B Ltd. Messrs A and B will still own Newco 50:50.

To the extent that the consideration is cash/creation of a loan balance I'm guessing a gain will come into charge and they could claim ER?

Is there a mechanism for HMRC to disapply CGT treatment? I'm guessing there must be or some people could sell their company to a Newco every year to create a gain and a loan account balance? Could someone tell me what the mechanism is and whether a clearance is available to provide certainty of outcome?

Is HMRC's line of attack the TiS rules - and so is a s701 (the old s707) clearance the way to gain certainty?

Thoughts appreciated

Cheers

Comments

There are 11 comments. Login or register to view them.

Transactions in securities

gbuckell | Tue, 26/02/2013 - 11:26

@Graham

George Attazder | Tue, 26/02/2013 - 11:37

75%

gbuckell | Tue, 26/02/2013 - 11:52

Yes but

George Attazder | Tue, 26/02/2013 - 12:05

.

blok | Tue, 26/02/2013 - 12:25

Interesting

gbuckell | Tue, 26/02/2013 - 12:38

My suspicion would be...

George Attazder | Tue, 26/02/2013 - 13:07

Result of further reading...

secondhand_22 | Tue, 26/02/2013 - 20:56

Unlikely

gbuckell | Wed, 27/02/2013 - 10:54

Ooh... I'd forgotten that the OP had come back on this

George Attazder | Wed, 27/02/2013 - 11:13

Fundamental change of ownership exemption

Marrster10 | Tue, 02/04/2013 - 22:10