The firm says the restrictions on eligibility made in the 2015 Budget, has made it increasingly difficult for business owners, of SMEs in particular, to claim entrepreneur’s relief, which reduces the CGT rate from 20% to 10% on sales of all or part of their business.

HMRC projects that only £2bn of entrepreneurs’ relief will be successfully claimed against CGT bills in 2016/17, down from £3.5bn in each of the two previous years, according to figures from Moore Stephens.

James Badcock, partner at Collyer Bristow, said: ‘CGT is becoming a major issue for investors and business owners, which could lead some to seek relief from increased taxation through avoidance schemes.

‘In the past, CGT avoidance schemes have included creating artificial capital losses which can be used to offset the tax, whilst others might use offshore trusts and structures to make use of loopholes.’

In addition, Badcock says there is a risk some taxpayers will simply fail to declare the sale or transfer of an asset, or undervalue it when reporting to HMRC, and may be unaware of legitimate ways of reducing CGT liabilities. These include becoming non-UK resident prior to disposing of a business interest, or investing the proceeds in tax approved investments such as through the enterprise investment scheme by which CGT is not paid until the new investment is sold.

‘Those wishing to mitigate CGT on the disposal of assets should seek advice and ensure that they do not cross the line into what could constitute abusive avoidance or evasion,’ Badcock said.

Report by Pat Sweet