Readers' forum : Shares to and fro

Three brothers are employed by their father’s electrical contracting company. This is a small business with fewer than ten employees and turns over less than £1m a year. That said the company has seen small and steady growth every year of business. At the moment each of the three sons has a single B share and their father owns all of the other issued shares.

The father is considering retiring. The plan is that the sons will each give their B shares back to their father. The father will then give each of the sons 30% of the issued shares while he will retain a 10% holding for himself. The company has never been valued so we have no idea of its true worth.

My question is whether the shares that are being ‘gifted’ between the various parties will be treated as subject to capital gains...