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A failed attempt to avoid the tax charge on loans to participators is analysed by MIKE TRUMAN
KEY POINTS
- Aspect Capital Ltd tried to find an alternative to unapproved options.
- ‘Facility’ to buy shares not intended to convert to debt until repayable.
- Held to have acquired shares from trustees although could have been structured differently.
- ‘Debt until a contingency’ distinguished from ‘no debt unless a contingency’.
I used to regularly give a CPD course on unapproved share schemes. I structured it on the basis of asking how employers would try to remunerate employees with shares in order to reduce or avoid a tax liability and then explained how the legislation prevented each such attempt in turn.
One of the basic principles of unapproved share schemes is that if employees are granted options the difference between the option price and the market value at the date they exercise them...
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