Entrepreneurs’ Relief – definition of ordinary share capital

By Technical Team on 19 Sep 2018

The minutes of the Capital Taxes Liaison Group on 12 January 2017 (see here) include the following extract:

5. Ordinary Share Capital vs. Preferences Shares

RC said that attendees would be aware of the McQuillan case: HMRC’s appeal was due to be heard in the High Court in July 2017. Until that case was final, HMRC’s position on the definition of ordinary share capital would be unchanged. That said, RC had sent the list of examples provided before the meeting to his colleagues in CTIS who owned the definition and they had supplied HMRC’s considered position in each case. They were happy for their notes to be shared with attendees, and RC said he would arrange for the annotated document to be sent by email after the meeting. Attendees were pleased. (Note: duly sent by email on 12 January.)

HMRC has recently agreed that the CIOT can publish this document with the caveats that these are HMRC’s initial views, some of the examples (in particular 8 and 11) are finely balanced, and whether or not the view expressed is the right outcome may depend on the specific facts and circumstances.

HMRC note that the guidance in the Company Taxation Manual (CTM) will be updated in due course.

Technical Team