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The consequences of leaving in haste when capital gains tax entrepreneurs’ relief is at stake.
KEY POINTS
- Timing departure as an employee or director when selling shares in the company.
- What constitutes continuing employment duties?
- The impact of the new reduced 20% rate of capital gains tax.
- Importance of tax planning before completing transactions.
The conditions to qualify for capital gains tax entrepreneurs’ relief are onerous. It is a condition that when there is a disposal of shares the vendor must be a director or employee throughout the year leading to the disposal. In reality many directors leave in haste and then sell their shares by some form of ‘post-departure agreement for sale’. Many would argue that from a practical point remaining as a director provides an improved position of strength for negotiation as well as tax relief.
The First-tier Tribunal decision in J Moore (TC4903) shows the...
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