The Dependent Subsidiary Trap

28 August 2002 / Malcolm Gunn

Issue: 3872 / Categories: Comment & Analysis , IR35

MALCOLM GUNN FTII, TEP discusses an easily overlooked tax charge on share acquisitions by directors and employees.

SAD TO SAY no one has ever given me any shares in a company with a view to their pouring massive value into those shares afterwards leaving me to sell up at some later stage with a nice fat profit. I am still open to offers but in the meantime I am left to turn green with envy at any such lucky individuals. However unlikely this scenario may sound to people like me there are apparently some out there who have enjoyed exactly this type of good fortune so that there is a particular Schedule E section designed to collect tax on their profit. Most of me wanted to say 'jolly good show too' to help compensate for my missing out but I decided to allow the remaining little bit of me to hold sway while I write this article.

That...

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