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How ordinary?
Key points
- Did the taxpayer dispose of ordinary share capital that carried a right to a fixed rate dividend?
- HMRC disallowed entrepreneurs’ relief on the basis the shares were not ordinary share capital.
- Relevance of ITA 2007 s 989 to entrepreneurs’ relief.
- For a dividend rate to be fixed it must be a fixed percentage or amount per share.
The meaning of the phrase ‘ordinary share capital’ has been the subject of some debate in recent years. As Pete Miller highlighted in his article ‘A sedative of ordinariness’ (Taxation 18 September 2019 page 18) the phrase is used in framing the criteria for several important tax reliefs so it is vital there is no ambiguity as to its meaning.
Unfortunately disputes arise and a particular one S Warshaw (TC7107) on the correct meaning of the phrase for the purposes of entrepreneurs’ relief (now...
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