Holdover relief meaning

Cox and another v HMRC [2024] UKFTT 510 (TC) A married couple, the taxpayers served as directors and minority shareholders in a company that operated as financial advisers. Each owned roughly 6% of the share capital. In 2018, several shareholders, including the couple, chose to sell their shares to other continuing shareholders. During a meeting between the directors and a representative of the solicitors dealing with the sale, EWM, the representative went round the table to confirm that every director and their spouses would be entitled to entrepreneurs’ relief on the disposal. Afterwards, the directors determined that the sale consideration should be divided so as to better reflect each person’s contribution to the business. Consequently, the taxpayers each gifted part of their shareholding to other shareholders. Those gifts qualified for holdover relief but left each taxpayer with a 4% stake in the company. They did not obtain independent financial advice on the tax impact of the gifts for entrepreneurs’ relief, relying on...

Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...

A secondary buyout (SBO) A secondary buyout (SBO) occurs when private equity finances the purchase of a company that has already undergone a prior buyout. They provide one route for private equity funds to realise and exit an existing buyout position. In an SBO the current private equity house sells out, yet the target's management typically remains in post following completion, albeit some managers may depart and be replaced, or, more rarely, a wholesale change of management may occur. Managers who continue are usually required to sell the interests they acquired in the target vehicle under the earlier buyout, receiving consideration from the new private equity backer. Accordingly, continuing managers dispose of the interests they previously acquired in the target vehicle and accept the consideration proposed by the incoming investor. They then participate, to some extent, by acquiring interests in the vehicle used to implement the SBO. At least in part, this entails the team taking a stake in the new SBO acquisition vehicle. This Practice Note reviews the...