Company Sale

The issue

A group of shareholders had accepted an offer to sell their company to a third party buyer. They wished to sell their shares in order to benefit from entrepreneurs relief and hence incur a maximum capital gains tax rate of 10 percent.

The company had entered into a tax planning arrangement in the past which the buyers were uncomfortable with and were therefore unwilling to acquire the shares. The buyer proposed that they buy the trade and assets instead but this would have resulted in a much higher tax liability for the shareholders.

The solution

A new structure for the company was developed (with the benefit of advance clearance from HM Revenue and Customs) whereby the shareholders were able to dispose of their shares and retain their entitlement to entrepreneurs relief whilst extinguishing any risks for the buyer.