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I am looking at a company buyback of its own shares for one of my clients. The shareholder is a limited company. For individual shareholders the buyback could be treated as a distribution or a capital gain depending upon TA 1988 s 219.
Statement of practice 4/89 says that this is not the case for corporate shareholders where the purchase of own shares is to be treated as a chargeable gain.
Where the substantial shareholdings exemption applies there would be no taxable gain. In my client’s case the corporate shareholder will not qualify for the exemption and a non-taxable distribution would be preferable.
SP 4/89 states that the distribution is included in the corporation tax calculation on chargeable gains because of TA 1988 s 208 which states that the distribution is not charged to...
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