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The taxpayer was an accountant and acted for CAD Ltd. In June 2013 he bought the entire issued share capital – 99 shares – in the company for £1.95m. The company then immediately bought 98 shares for £1.95m. The taxpayer said it was a trading transaction and the aim was to wind up the company within two years. The deal was in effect financed by the company; he had owned the buyback shares for less than one hour. The disposal was therefore one of trading stock. As an alternative the transaction should be treated as the acquisition of a single share.
HMRC said the proceeds represented a distribution of company assets.
The First-tier Tribunal dismissed the taxpayer’s alternative argument on the ground the documentation did not support it.
On the transaction the tribunal referred to Marson v Morton [1986] STC 463 and said it fell in ‘the no-man’s land where different...
