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Share buy-backs with multiple completion dates

08 July 2019 / Kevin Slevin
Issue: 4703 / Categories: Comment & Analysis
Streamlining shares

Key points

  • It has been generally accepted that a contract by a company to purchase its own shares with multiple completion dates will be treated as a disposal of the whole shareholding.
  • TCGA 1992 s 28 confirms that if an asset is disposed of and acquired under a contract the contract date is the time of disposal.
  • HMRC suggests that in a share buy-back the company does not acquire an asset so TCGA 1992 s 22 applies.
  • If HMRC is correct each tranche of shares in a multiple completion contract will be a separate disposal.
  • The revised interpretation could mean a loss of entrepreneurs’ relief.
  • Should consideration be given to alternative methods of share buy-back?

In my recent article ‘House of cards’ (Taxation 23 May 2019 page 14) I highlighted potential tax issues arising out of non-compliance with provisions in Companies Act 2006 Pt 18 on share buy-backs....

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