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The good, the bad, the could do better
Key points
- The Finance Act 2014 introduced legislation so that the sale of a company into an employee ownership trust would be free of capital gains tax to the vendors so long as the relief requirements were met.
- A benefit of being owned by an EOT is that the company doesn’t have to pay its profits to shareholders but can retain them for the benefit of the business.
- The legislation clearly has pitfalls.
- The relief requirements have to be satisfied at all times after the company is sold into an EOT but it is not always clear that trustees have been appropriately advised on this point.
- The author has submitted three ideas to HMRC on how the legislation could be improved in order to ensure that it hits its target market but also looks more like genuine employee ownership.
- Would readers consider that setting up an EOT with...
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