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30 August 2011
Company purchase of own shares – value
The recent query Close connection dealt with a company purchase of own shares. In the query Fisher was concerned that HMRC might be able to substitute market value for capital gains purposes on a purchase by a company of its own shares.
Reader Jim Greenwood suggests that one advantage of a purchase of own shares is the fact that HMRC cannot substitute market value for capital gains.
The reason is that TCGA 1992 s 18 applies where a person acquires an asset and a person making the disposal is connected with him. In a purchase of own shares the company does not acquire the shares they are cancelled.
Jim points out that there is a risk that shares held in treasury might be treated as being acquired but such...
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