Business Asset Disposal Relief

[repairer]

Hi,

Hoping someone knows the answer to this...

I have owned a 32% shareholding in a limited company for near on 20 years, I am a Director of the company, and was MD until I retired 2 years ago.

Now the 2 remaining shareholders have indicated they wish to buy my shares, I have agreed a price with them, the payments will be made in two lump sums over a 12 month period.

I have called HMRC this week to confirm if -

a, I qualify for Business asset disposal relief - so only pay 10% tax on the sale

b, If the above is correct can I pay the full tax on the purchase price before I receive the second payment, so for example if my shares sell for 150k and first payment is for 75k, can I pay HMRC the tax on the 150k before I receive the second 75k?

The person I spoke to did not seem to know the answer, the original answer given was yes on both on both counts, saying they would mail me through a Helpsheet.

I have now received the Helpsheet, along with a message in the E mail saying -

"Per our discussion yesterday, unfortunately you will not be able to claim Enterpreneurs’ Relief because you are not classed as an individual who is self employed. You are class as Company because you are the Director of the Company."

From everything I have read on this subject it would seem the person at HMRC is wrong, does anyone have any experience in this area before I call them back? (not sure on the reference to "Entrepreneurs Relief" in the reply either, thought Business asset disposal relief had replaced this?)

Should I be correct and the person at HMRC is wrong, can I deduct my original investment in shares from the selling price? as shareholders we all invested in the company at its inception.

Any help much appreciate before I call them back.

thanks

Peter

​

 

[Rawlinson Pryde]

These 2 links will probably help you more!

Business Asset Disposal Relief

Business Asset Disposal Relief (was known as Entrepreneurs' Relief) can reduce your Capital Gains Tax (CGT) when you sell certain business assets or shares - eligibility, deadlines, how to claim.

www.gov.uk

Capital gains tax | Low Incomes Tax Reform Group

Capital gains tax (CGT) is a complicated subject, so we provide an introduction only. We do cover the main issues, though, and signpost you to where

www.litrg.org.uk

 

[WaveJumper]

Would it not be a good idea to speak to the accountant of the company you actually have the shares in

 

[pentel]

I would strongly advise using an accountant to liaise with HMRC for this.

 

[Lisa Thomas]

Echo'd.

 

[repairer]

Hi guys,

Many thanks for the feedback, having spoke to HMRC today, it looks like my only route is through an accountant, HMRC could not have been less helpful if they had tried!

 

[UK Contractor Accountant]

Have you been registered as an employee and/or a Director of the company for the previous 2 years?

If no then unlikely you qualify for BADR.

 

[repairer]

Hi I am still a director of the company, I have been for near on the last 20 years, no longer an employee as I retired 2 years ago, but still registered as a director.

thanks

 

[UK Contractor Accountant]

The Disposal amount for the CGT calculation will be based on the contract sale price irrespective of how many number of instalments over which it is payable.

 

[repairer]

Hi Many thanks for this, I am going to go through with the sale and submit a self assessment tax return after 5th of April 2022

thanks

 

[CA85]

HMRC could not have been less helpful if they had tried

In fairness, it is not HMRCs job to give tax advice.

 

[DWS]

In fairness, it is not HMRCs job to give tax advice.

And if they do, it certainly shouldn’t be relied on!