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Andrew Hubbard highlights a potential problem with the 5% entitlement to assets test in the new entrepreneurs’ relief rules.
KEY POINTS
- Finance (No 3) Bill 2018 introduces a new definition of personal company.
- A problem arises on the meanings of the terms ‘assets available for distribution’ and ‘equity holders’.
- A normal commercial loan must meet the conditions A to D in CTA 2010 s 162.
- If a loan is non-commercial the loan creditor may fail the tests for entrepreneurs’ relief.
- Arbitrary results could be produced if a company has a strong asset base and a small number of preference shares or non-commercial loans.
Another ER problem
Andrew Hubbard highlights a potential problem with the 5% entitlement to assets test in the new entrepreneurs’ relief rules.
In ‘Not so funny’ (Taxation 22 November 2018 page 18) Kevin Slevin showed that the legislation in Finance (No 3) Bill 2018 to amend the 5% test for entrepreneurs’ relief is fundamentally flawed and goes beyond the government’s stated policy intention.
He concentrated on...
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