Content
After U, Gordon?
Ups And Downs
Gift Horse
What A Relief!
Second Thoughts?
Last One Out...
Penalty Shoot-Out
Ain't Necessarily So
Going, Going, Gone
Papers In Order?
Death And Taxes
Passing The Buck
Hire Higher
Back Taxes, Taxes Back
Options Open
Extortion?
Sick Note
Cats And Dogs
Old-Fashioned Money
I Thee Endow?
Mother's Rights
Countdown
Nowhere To Hide
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If you put new money into a company as share capital, you can claim Enterprise Investment Scheme relief and defer the charge on capital gains you have made. That's particularly important at the moment, as you get three years to make the investment - you could get back CGT you paid in the last three years at 40%, and carry it forward so you will eventually only pay at the new lower rate of 18%. You can't claim EIS relief if shares are issued without new money going in. The Revenue are very fussy about the procedure, and it's worth getting it right. Recently a dispute arose because a man put £1.2m into his company without a formal letter of allotment or share application. The share register was written up later to show that he had subscribed for new shares, but the Revenue argued that this was in fact capitalising a loan - the money wasn't "new" when the entries were made in the books. The Appeal Commissioner decided that the Revenue were right. The paperwork was not in order and he could not defer his capital gains. The High Court judge, hearing his appeal, took a more sympathetic line. It was clear that the money was intended to be share capital, so there was never any question that it was a loan. The lack of paperwork didn't change the facts. Although that story had a happy ending, it's not ideal to have to go to the High Court to get there - if you want to defer CGT charges, we will be pleased to tell you how to do it so that the Revenue accept what you claim. |
© Bayar Hughes & Co., 2010.