Recent cases successfully establishing Entrepreneurs Relief

We have dealt and resolved a great many set of problems in our time. Our clients work with us because we combine legal expertise with tax expertise. A reduction in the number of professional advisers is always a good move.

If the transaction is scrutinised by HMRC the availability of good documentation is important and can be the difference between reducing the rate of capital gains tax to 10% or paying tax at higher rates. Our recent instructions include:

Transfer of shares to spouse to double up tax savings

Acted for an entrepreneur who was planning a sale. We dealt with the transfer of shares to his spouse so that the lifetime allowance for her of £10 million was fully utilised and ensured she was on the payroll in good time.

Share buy back

Acted for a director shareholder who was leaving the company following shareholder disputes on the taxation of proceeds received following a buy back of shares by the company.

Retirement from partnership

Dealt with the retirement of a partner from a hedge fund who was paid a sizeable capital payment following the disposal of assets.

Trading company status where there was a large cash balance

We acted on behalf of a company producing padlocks. The company had £1.2m cash representing profit accumulated over seven years. The cash was kept in the business with a view of investing it in a new warehousing facility, so far the biggest cost of the business. The 100% shareholder was offered to sell 50% of shares in exchange for a warehouse which he wanted to take up but feared that his shares will not qualify as shares in a trading company.

We prepared a clearance application to HMRC and successfully argued that the company’s trading history indicated incidental investment activities which do not qualify as substantial. HMRC confirmed trading status.

Mixed trading and non trading activities

We acted for a mattress manufacturer. The client owned two companies, a trading company producing mattresses and a property company, holding a number of flats for rental. We suggested an alternative structure whereby the non-trading activities of the group would be spread over a number of companies. That made the trading companies’ investment activities insubstantial. Based on our restructuring, we helped the client incorporate the new companies and allocate the assets accordingly.

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