Is entrepreneurs' relief available?

Entrepreneurs' relief and ascertainable value

Didn't find your answer?

Many thanks in advance for people's help. We have a situation where a shareholder and director is retiring and his shares are being bought out by the remaining directors. He will be receiving deferred consideration, but the value of the shares will be fixed by reference to the unrealised profits in the company's accounts at his retirement date. Does this count as an ascertainable value, so Entrepreneur's relief is available? It is obviously not known at the date of retirement what precise figure this is, as it will take weeks if not months to collate all the information together to finalise the accounts. 



Replies (1)

Please login or register to join the discussion.

By jasonowsky
28th Mar 2018 15:44

Sorry, just found this on HMRC website, which provides the answer! Seems it is ascertainable

Deferred consideration: what is ascertainable

The amounts of the future payments are ascertainable if at the date of disposal they are

•ascertainable by calculations,

•ascertainable by making up an account AND all of the events which establish the AMOUNT have occurred by the date of the disposal.

If the future payments are unascertainable see CG14940+.

Examples of ascertainable future payments are
•the agreement for the disposal of the asset provides for a consideration of £300,000, of which £100,000 is payable on completion and £200,000 will be payable in four annual instalments of £50,000, or
•the agreement for the disposal of a business provides for a consideration of £100,000 and a sum equal to half of the taxable profits of the business for the year ended on the date of disposal, payable nine months after the date of the contract.

Thanks (0)