Entrepreneurs who sold their businesses in 2005/06 for paper have no idea
what capital gains tax they should be paying because of a lack of guidance on
how to treat purchases paid for with loan notes.
Brief notes published by HM Revenue & Customs on the new Entrepreneurs’
relief do not say whether they will be able to claim the new relief when cashing
in their earn-out rights after 5 April.
‘HMRC will not confirm if deferred gains attached to loan notes will qualify
for the new Entrepreneurs’ relief. We cannot advise loan note holders whether
they should elect to crystallise their taper relief or wait and claim for the
new Entrepreneur’s relief instead,’ said PKF tax partner Peter Harrup.
It is common practice for business-owners who sell-up to receive payment as
an ‘earn-out’ or deferred payment, and the option is available to pay CGT
immediately or wait until the notes are cashed in.
The situation leaves thousands of entrepreneurs with less than a week to sort
out their affairs ahead of the self-assessment deadline on 31 January.
The draft legislation is not expected until mid-February when the election
deadline will have passed.
HMRC’s Capital Gains Tax Team has said it cannot comment on the issue until
the full rules are published.
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states