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Readers’ forum: Capital treatment on previous purchase of own shares

12 June 2023
Issue: 4892 / Categories: Forum & Feedback , Capital Gains
Financial advisers

We act for a firm of financial advisers which operates as a limited company ABC Ltd. Until about six years ago Harold (H) and Edgar (E) were equal shareholders. H is ten years older than E retired and the company purchased his shares having obtained clearance from HMRC. H is virtually retired and no longer connected with the company but maintains his professional qualifications and occasionally offers pro bono advice.

E has sadly just been diagnosed with an inoperable brain tumour with a limited life expectancy. He therefore wants to dispose of the business as soon as possible.

H and E have remained good friends. H has asked whether his CGT treatment would be at risk if he were to now come out of retirement and buy E’s shares. This would provide E with funds to make the most of his remaining time. H...

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