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Entrepreneurs Relief and GAAR

Client has been employed by buyers of his company

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My client sold all the shares in his company last year to a multinational company. He is however now employed by them.

Will he still qualify for entrepreneurs relief or will he be caught out by the GAAR

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By Matrix
26th Sep 2020 10:13

What did he receive for his shares? Cash, shares, QCBs?

I don’t think working as an employee would affect the relief, have you checked the anti avoidance provisions? I thought the target was connected companies. I imagine your client’s scenario is quite common.

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Replying to Matrix:
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By AANM
26th Sep 2020 10:54

He received cash for his shares. I am a bit confused about the GAAR rules. For e.g a contractor who winds up his company and continues the same trade as an employee cannot take the money out as capital, it has to be income so they won't get entrepreneurs relief.

I just wondered if the same applied to this, although as you say its a very normal commercial transactions with no intentions of tax avoidance. I just need a second opinion

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Replying to AANM:
Psycho
By Wilson Philips
26th Sep 2020 11:45

For starters, it’s “T”, not “G”

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Replying to Wilson Philips:
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By AANM
26th Sep 2020 11:57

Oopsie! I am confusing it with the General Anti Abuse Rule. Of course its TAAR

Anyway after reading the CTM manual I think he qualifies for ER as condition D is not met

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Replying to Wilson Philips:
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By Paul Crowley
26th Sep 2020 14:19

Much appreciated
I still think GAAR
I say gaar
not gar as in Gary

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Replying to Paul Crowley:
Psycho
By Wilson Philips
26th Sep 2020 16:59

I agree. If any anti-avoidance were to apply it would be GAAAAAAR. But it sounds like OP is thinking (incorrectly) of TAAAAAR, me hearties.

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Replying to Wilson Philips:
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By unearned luck
27th Sep 2020 11:44

You traduce the OP slightly (s)he asked about the GAAR and now you concede that, if anything, it would be the GAAR. But in the case of a sale of shares HMRC's threat in a Spotlight to use the GAAR is mere sabre rattling.

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Replying to unearned luck:
Psycho
By Wilson Philips
27th Sep 2020 14:44

Whatevvva

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