Associated disposals and capital gains entrepreneurs’ relief

KEY POINTS

• A father intends to pass shares to his son at the time of an associated disposal.
• Could the possibility of a subsequent share transfer to the son be deemed a ‘share purchase arrangement’?
• FA 2015 introduced the 5% disposal test.
• The measure to counter avoidance using ‘share purchase arrangements’ was introduced by FA 2016.
• HMRC agrees that the ‘share purchase arrangements’ are not intended to include genuine commercial succession arrangements.
• Remember that the 5% disposal test relates to the total shares in the company rather than the individual’s shareholding.

I was surprised that two presumably unconnected respondents to a Readers’ Forum question on associated disposals had each concluded that the circumstances described by the questioner could be construed as involving a ‘share purchase arrangement’ (see...