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CGT, shares and residency

CGT, shares and residency

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One of our clients is looking at selling the company and some of the minority shareholders are non-resident.

CG2550 mentions that if a non-resident carries on a trade in the UK through a branch or agency then they will be within the charge to CGT.  However, the charge does not apply to any person exempt from income tax on the profits of the branch or agency because of Double Taxation agreements.

As most of the minority shareholders would not have been liable to income tax on the dividends, woudl you consider that they would not be liable to UK CGT on the shares.

Any answers appreciated. 

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By Peter The Painter
29th Sep 2011 15:35

Who carries on the trade?

This legislation (s10 TCGA 92)  does not catch non UK resident shareholders, as they are not conducting a trade in the UK. The company, a separate legal entity, is trading in the UK. 

However, it does catch non resident sole proprietors and non resident partners (where the partnership is the agency). It is a particular problem for partneships as the UK resident partners can be charged the tax due from the non resident.

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