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Share scare

17 May 2011
Issue: 4304 / Categories: Forum & Feedback
The owner of a trading company wishes to sell the shares to his management team. However, this will be at below market value. Would this be a gift for inheritance tax purposes? The owner is concerned because he has had a recent health scare

Our client owns all the shares of a trading company. He has no involvement in the company’s day-to-day operation and is therefore very receptive to interest expressed by the management team in acquiring the company.

The price offered is approximately half of what it is generally accepted that the company would be worth if it was to be sold on the open market and this has been confirmed by outline interest expressed by third parties. However the offered price is acceptable to our client for the following reasons.

  1. He has other significant financial interests and so maximising the value he receives for the company is not a concern.
  2. In the current economic climate the price offered reflects the maximum funding that the management team can source.
  3. Having run the company successfully to date...

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