Readers’ forum: Capital exit

My client is a shareholder in a special purpose company that was established three years ago to develop a property. His shares cost £400 000 and are currently valued at £800 000. He also loaned £2m to the company. The project is nearing completion and the loans will be repaid with interest in the near future.

One of the other shareholders is interested in acquiring my client’s shares which would suit my client because it appears to secure him capital gains tax treatment for his profit without waiting until that is possible on a share buy-back (another two years) or requiring the liquidation of the company.

I am concerned that there might be something that would nevertheless deem the £400 000 profit to be a distribution in my client’s hands or would create a tax problem for the other shareholder (which the client would not countenance). ...