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My client and his wife are directors of a limited company and they own shares 60%/40%. The company is a member of a general trading partnership that operates a trade for business asset disposal relief (BADR) purposes but there is uncertainty around the eligibility for BADR for my client.
On 31 March 2020 it was agreed that the company would leave the partnership and my client and his wife would be entitled to a fixed profit share and no rights to the partnership capital (having previously been entitled to 15% of profits and capital).
The company is continuing for two years on the current arrangement of a fixed profit share until 31 March 2022. My client would then seek to liquidate the company and claim BADR relief.
Following the introduction of TCGA 1992 Sch 7ZA by FA 2016 the provisions in Part 3 determine whether my...
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