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MARK MCLAUGHLIN considers potential obstacles to obtaining capital treatment on a company purchase of own shares and reviews company law issues.
Key points
- Conditions for capital treatment.
- The status of the company.
- Retained interests and the relevant tests.
- Phased purchases and multiple completions.
- The company law requirements.
IT HAD BEEN on the cards. Martin and Jason requested an urgent meeting with their accountant and tax adviser Bob. After many years in business together these clients could tolerate each other no longer. Their body language suggested anger and mutual resentment and their trading company was suffering badly because of their inability to agree on most things. However they were agreed that one of them had to go! Martin was prepared to 'walk away' if he could get a 'fair' price for his shares. However Jason could not afford to buy Martin's shares. A company purchase of own shares was therefore discussed. However...
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