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CIOT spring residential conference

07 May 2019 / Stephen Nixon
Issue: 4694 / Categories: Comment & Analysis
Meeting points

Entrepreneurs’ relief – trials and tribulations

Peter Rayney covered the three principal changes to entrepreneurs’ relief in FA 2019 Sch 16. These are the new 5% economic tests the tracing incorporation relief and the new dilutions provisions.

He explained that initially the economic test required at least 5% beneficial entitlement to the profits available for distribution and 5% of the available assets on distribution at winding up to equity holders. This would have ensured that virtually all companies with alphabet shares ceased to have qualifying shareholders. Fortunately HMRC was persuaded to introduce an alternative economic test that asks whether the individual would be entitled to 5% of the profits on a notional disposal of the company. This is likely to preserve entitlement for many shareholders with alphabet shares and similar structures which would have been lost under the initial proposals....

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