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Departure is too early

19 April 2016
Issue: 4546 / Categories: Tax cases

J Moore (TC4903)

Conditions for entrepreneurs’ relief

The taxpayer was a founding shareholder and director of a company established in 1995. During 2008 a disagreement between the taxpayer and the other directors caused him to leave. In January 2009 a settlement was agreed under which the company would purchase 2 700 of his 3 000 shares. In addition his employment would be terminated and he would receive an ex gratia payment. He claimed entrepreneurs’ relief on the disposal of the shares (TCGA 1992 s 169H).

HMRC refused the claim because he had not been an officer or employee of the company ‘throughout the period of one year ending with the date of disposal’ of his shareholding on 29 May (s 169I(6)(b)).

The taxpayer appealed. He argued that although he had resigned as a director and terminated his employment on 28 February 2009 he qualified for relief because the disposal...

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