The redundancy pay was dealt with correctly as a non-taxable item. I think the problem lies within the Revenue's computer (or rather the lack of any 'sanity check'.
The problem was that she was placed on a K code which would have denied her any personal allowance and increased her taxable pay from the new employer by a notional £1669 per year.
Never mind the accounting treatment read up on the transactions in securities legislation especially IRC v Cleary
You haven't yet told us whether the business is continuing in different premises or whether business is being sold together with the assets. Until you do, no-one can tell whether entrepreneurs' relief is in point at all.
Yes there are other situations. I was tempted to ask whether there was a company involved but if the questioner reads the legislation he or she should become aware of those other situations. (Too many questioners fail to read the legislation before asking the question)
Also read the legislation. The relief is only available of the disposal of a business or part of a business. If client is continuing with the business, read up on roll-over relief.
If its compensation its not 'income' and its not a capital sum derived from an asset.
It will all depend on whether client still leaves UK in 2018-19 or 2019-20. You need to study the statutory residence rules in FA 201, particularly the split year provisions. You should know the client's intention re residence and then advise him/her on how to achieve that intention, so you should know in advance what client's residence status is likely to be from the outset.
The date of disposal is the exchange of contracts therefore 2018-19. As client is UK resident for that year, this is not a non-resident CGT disposal therefore no NRCGT return is required.
See s. 14B(1), (2)(a) and (3)(a) TCGA
You have said " The shareholder is happy to do this as a gift or for a minimal payment. "
Section 17 is indeed in point as I was indicating. An arm's length transaction is one which is freely negotiated and whilst that may still prove to be a bad bargain it will be at arm's length. Here we seem to have an obvious intention to confer a benefit on someone so it ain't at arm's length and is a transfer of value.