Share buyback and Entrepreneurs' Relief

Where a 50% shareholder is looking to exit and satisfy capital treatment under company purchase of his shares but enters a multiple completion contract as company has insufficient distributable reserves and cash to complete in one payment, will the accumulation of cash temporarily invested until the next staged completion date result in a problem for qualifying for Entrepreneurs' Relief ?

The trade benefit test will be satisfied for purchase of own shares capital treatment but will HMRC consider the temporarily invested funds over a 2-3 years with staged buyback completions to be a non trade asset as being used to buy out a shareholder (albeit for the benefit of the trade in future).

Has anyone had experience of this and is a non statutory clearance worth considering to clarify the position with HMRC if sums involved are large? 

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Whose Entrepreneur's Relief?

BKD |
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