I have a client who is looking to set up a Family Investment Company (FIC) for the IHT benefits. He is to own 'A' shares with no rights to income or capital. The 'B' shares that will be held by his children which will have these rights (but no voting rights).
My client is to lend the FIC £650k to be repaid when funds allow.
With the £650k my client wants the FIC to purchase shares in his established unlisted trading company.
My question is, would he still be able to claim Entrepreneurs Relief on the sale of part of his shareholding in his unlisted trading company to the FIC?
Thanks
Replies (6)
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Re CGT he would need to watch TiS and in any event would be a bit mad to put a BPR company into something that may not qualify for BPR. See:
https://www.pumptax.com/wp-content/uploads/2017/01/EC-Estate-Planning-fo...
Even if the FIC was a BPR company, shareholder loans thereto are never a good idea as they do not qualify for BPR and prefs should be issued instead.
Since HMRC are of the view that taking back only what is rightfully yours is offensive, there's little point in giving them the satisfaction of saying no to a clearance application.
Having said that, you really need to ask the client "why?"
Perhaps the planning in the link below could be considered in that case:
https://www.taxjournal.com/articles/exiting-shareholders-tax-efficient-m...