Mr Gibson a director of Gray’s Timber Products Ltd held 5% of the total issued share capital of Gray’s Group Limited for which he paid £50 000.
Under the terms of a subscription agreement he was entitled to receive 25% of the sale proceeds a disproportionate amount compared with the other shareholders.
The company’s entire share capital was sold to Jewson Ltd in November 2003 and Mr Gibson was paid 25% of the proceeds.
HMRC said that the consideration for the shares exceeded ‘the market value of the employment-related securities at the time of the disposal’ within the meaning of ITEPA 2003 s 446Y. The company appealed saying that the shares were sold for their market value.
The Special Commissioner dismissed the company’s appeal as did the Court of Session....
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