Client may be offered a payment to relinquish a veto on a share transaction affecting the other shareholders. How should this be treated for tax?
Ta
Nathan Hamill
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more cautiously now ....
.... if the veto doesn't affect the capital value but is merely a temporary accomodation, is it a capital sum at all? In which case it would surely be what used to be known as Case VI as it is something done for a consideration.
Fools rush in ...
... as they say. Off-hand I'd say it's a sum derived from a right, or rather for refraining from exercising it, and would be a capital sume derived from an asset. As such the amount would simply be liable to CGT. Zim Properties is relevant. There is no cost if the right could be viewed as separate from the shares in the company. It would be relevant to know whether the veto derives from the company's articles and may thus be viewed as attaching to the shares or a separate agreement e.g. shareholders' agreement.
One rushes in
It strikes me as a capital sum derived from an asset.
If it permanently devalues the remaining asset then there may be a case for A/A+B treatment.
Try WJB Chiltern.