Prior links have included:
https://www.legislation.gov.uk/ukpga/2010/4/part/23/chapter/3/crossheading/purchase-of-own-shares
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/796707/seeking_clearance.pdf
https://www.taxadvisermagazine.com/article/purchase-own-shares
taken2often's latest reply at Pensions is repeated below and my reply (here at Taxes) follows:
taken2often wrote:To PinkDalek
I was not going to respond, but you created the need for all this extra dialog. You may have a wide knowledge of these matters, but others do not. I have read the 2010 Act and I cannot identify any part of it, that relates to our situation. It is very complicated to deal with very complicated situations. It seemed to relate to exemption and indicated that a company may make an application.
We were very uncomplicated Two controlling Directors with equal shareholding. The transaction was subject to capital gains if applicable. You are probably right that a nil return should have been made, but that would be no offence under Self Assessment. The penalty would be, the false manipulation of the share value, to avoid CG. If that had taken place This is why our Account always provided the share value and the transaction noted in the company minutes.
As it is the company has now been closed and no doubt well scrutinised, before closure was approved.
I have some knowledge from recent experience, yes, but I really am struggling to explain my concerns.
The issue does not concern Corporation Tax. The relevance of that section of the act is clearly explained in the article https://www.taxadvisermagazine.com/article/purchase-own-shares from which I provided an extract which I'll repeat:
CTA 2010 s 1000 provides that where a company buys back its own shares from an individual shareholder an income distribution occurs. Most share buy backs will therefore result in an income tax charge arising on the distribution, and to the extent that the proceeds exceed the repayment of share capital an income tax charge will arise at the shareholder’s marginal dividend tax rate.
As I understand it the transactions should not have been treated as disposals for Capital Gains Tax purposes by the two individual shareholders. I am not disputing what your accountants have done regarding the valuations, Companies House filings and, presumably, the payment of Stamp Duty each time there was a buy back over the last 20 years. Nor that the company has been "closed" (dissolved or whatever). I have not suggested there's been a false manipulation of the share value.
Nor did I intend to suggest a successful clearance application would have been available to you anyway to get CGT treatment. I included that link to show why I though it would not.
What I am suggesting is the shareholder(s) have failed to report the transactions on their Tax Returns as being subject to Income Tax.
What I would suggest, should you so wish, is that you review what your accountants (dare I ask if they are specialists in this field) advised with regards to how you should reflect the buy backs on your Tax Returns or were they not involved on that aspect? I am asking as, in particular, you have suggested that you may one day go down the same route with what you describe as "Top company".
If anyone else has been following our exchanges at Pensions and is able to comment further, either in support of your position or mine, that might assist!
I may be wrong on all this or we may not have the full picture.