HI,
I am helping one of my client (Private limited company) for buy backing the shares from it's director. Shareholder wants to apply for Entrepreneurs relief for capital gain. My question is that is it required to take any prior permission from HMRC or companies house ? Entrepreneur's relief is only available for capital distribution ? If the company has general reserve and distribute it to buy back the share then relief is not available ?
Your help and thoughts are much appreciated.
Replies (4)
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No "prior permission" to
No "prior permission" to claim entrepreneur's relief is required. If it was, it would be obtained from HMRC - certainly not from Companies House. Claims for tax relief are none of Companies House's business.
If a taxpayer makes a disposal to which he thinks entrepreneur's relief applies he claims it on his tax return when he declares the capital gain.
Entrepreneur's relief is only available when there is a capital gain. If the transaction contemplated is a purchase of its own shares by a company you will need to check out the conditions for such a purchase to be a capital disposal by the vendor shareholder.
Not sure what you mean by "exempt distribution".
A POS is either permitted by law or it is not.
If permitted by law, it either qualifies to be treated as a capital transaction for tax purposes, or the excess over the subscription price of the shares is taxed as a dividend.
Please clarify what it is that the wife wants to sell to "her company".