Yvette Nunn CTA, director of Berkeley Associates, examines plans to overhaul entrepreneurs’ relief but warns that the proposals could act as a disincentive for minority shareholders
Tax is not fair and it never will be. There will always be times where one group of taxpayers receives different tax treatment to another when they have almost identical circumstances. Credit is due when that difference is acknowledged and efforts are made to lessen the burden of tax when it seems particularly unfair.
Take the McQuillan case (Accountancy, Nov 2017, p24) where the shareholders satisfied all of the tests for entrepreneurs’ relief. The company was their personal company and they held at least 5% of the issued ordinary shares for the necessary amount of time. That was until they applied for a grant to expand the business.
The terms laid down by the regional business development agency in granting the required funding resulted in a loan due to other shareholders being converted into shares. When tested, the McQuillans’ interest no longer satisfied the tests for entrepreneurs’ relief.
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