Good morning all,
Here's the scenario.
Client owns 25% of the shares in a foreign company.
The other shareholders wanted to buy him out but they didn't have enough cash to do so. The foreign company has therefore purchased his shares for £1m.
Questions are therefore as follows:
1) Does the 'purchase of own shares' legislation apply in this scenario? If it doesn't could you point me in the direction of where the legislation mentions 'UK companies'.
2) If the share buy back rules are not in play is the only issue the Transaction in Securities rules. Rae vs Lazard tells us that for UK residents we need to follow the tax treatement of the local corparate law. Presumably this would apply in my case?
So in summary if the overseas authorities have treated this as a capital distribution then our client is well within his rights to do the same on his UK tax return. Is this analysis correct?
Happy to be corrected on any of the above and any help would be greatly appreciated.