Warshaw and ordinary share capital

The meaning of the phrase ‘ordinary share capital’ has been the subject of some debate in recent years. As Pete Miller highlighted in his article ‘A sedative of ordinariness’ (Taxation 18 September 2019 page 18) the phrase is used in framing the criteria for several important tax reliefs so it is vital there is no ambiguity as to its meaning.

Unfortunately disputes arise and a particular one S Warshaw (TC7107) on the correct meaning of the phrase for the purposes of entrepreneurs’ relief (now business asset disposal relief) has sought to bring clarity to the matter. This decision was discussed by Peter Miller in his aforementioned article and Sam Hart in ‘Out of the ordinary relief’ (Taxation 4 July 2019 page 12). The Upper Tribunal’s decision on HMRC’s appeal released on 23 December 2020 attempts to bring an end...