Gray’s Timber loses appeal

Mr Gibson a director of Gray’s Timber Products Ltd held 5% of the total issued share capital of Gray’s Group Limited for which he paid £50 000.

Under the terms of a subscription agreement he was entitled to receive 25% of the sale proceeds a disproportionate amount compared with the other shareholders.

The company’s entire share capital was sold to Jewson Ltd in November 2003 and Mr Gibson was paid 25% of the proceeds.

HMRC said that the consideration for the shares exceeded ‘the market value of the employment-related securities at the time of the disposal’ within the meaning of ITEPA 2003 s 446Y. The company appealed saying that the shares were sold for their market value.

The Special Commissioner dismissed the company’s appeal as did the Court of Session. The company’s appeal was then heard...