Associated persons under ER rules? (UK)

Who is considered an associated person when selling shares and claiming Entrepreneurs Relief?

Didn't find your answer?

Client is selling shares in a company and plans to claim Entreprenuers Relief. As far as I am aware if an associated person owns a controlling interest in the company after then ER may not be claimed. My question is, outside of the clients spouse, who would be considered an associated person under Entreprenuers Relief rules?

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By Tax Dragon
20th Dec 2019 11:28

I'm not sure what rule you (think you) are referring to. So I will talk in the generic.

Generally, TCGA refers to persons being connected, rather than associated. Connected persons are as defined in s286.

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By Tax Dragon
20th Dec 2019 11:32

I withdraw this comment #2. I misread your post.

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Psycho
By Wilson Philips
20th Dec 2019 12:31

Echoing TD's query, exactly why do you think ER would be denied where an associate continues to hold a controlling interest? (The vendor himself could continue to hold a controlling interest without prejudicing ER). Are you perhaps thinking of share buyback rules?

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Replying to Wilson Philips:
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By ShimsLady
20th Dec 2019 12:45

My apologies Wilson, I was not clear in my post.

In this case the shares would be sold to a potential associate so they wouldn't continue to have control but rather gain control from the purchase. Although the client was not clear about who the buyer might be they want advice on who would be considered an associate in this case.

I have been able to find information about associates under Section 435 in Part 18 of the insolvency act but nothing about if the same definition would be applicable under the ER rule set.

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Replying to ShimsLady:
Psycho
By Wilson Philips
20th Dec 2019 13:23

My (and TD's) point was - who told you, or where did you read, that the controlling interest of an associate has any bearing on availability of ER?

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By Tax Dragon
20th Dec 2019 14:29

I may need to reinstate comment #2. Your additional facts smell of a scheme. Be wary, when clients are scheming.

But Wilson is right about what I was getting at with comment #1.

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