The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:
The transactions in securities (TiS) legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a disposal of shares to obtain a beneficial capital gains tax (CGT) rate, ie avoid income tax, on specified transactions.
The rules are well illustrated by considering the case of Cleary v IRC. In this case, the Cleary sisters sold the shares in one of their companies to another in return for cash proceeds of £121,000 (considered to be market value). The House of Lords considered that this was caught by the TiS rules and that the proceeds of £121,000 were subject to income tax. HMRC sets out how it considered the conditions for the TiS rules were met:
HMRC seeks to apply this principle in particular to situations where a management team receives a continuing stake in the company set up to acquire their shares in the 'old company' on a secondary management buyout.
The rules need to be considered in many situations. You need a good awareness of the rules to be able to identify situations where they may be on point. The starting point is always to consider whether a situation is entirely outside the scope of the rules. If the situation is caught by the rules or there is an element of doubt then it is usually advisable to seek clearance
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