Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Loads of money

18 November 2014
Issue: 4478 / Categories: Forum & Feedback , entrepreneurs relief , Capital Gains

The effect of substantial company cash balances on entrepreneurs’ relief.

Our client is a long-established product distribution company and is relatively profitable. It has been operating for many years and has accumulated reserves of £10m of which about £7m is held as cash in the bank.

Apart from substantial fixed assets in premises and vehicles used in the business there are no other investments. No time is spent by management on managing the funds.

Our clients have had an approach to sell their business and we anticipate this would be a share sale. We have read that HMRC do not take the point of accumulated cash assets arising out of the company’s profits as a reason to disallow entrepreneurs’ relief on the whole of the sale proceeds where there is a substantial cash balance surplus to the company’s requirements. However our clients have been given conflicting advice.

The anticipated share price will give a substantial premium over the...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

back to top icon