Jurisdiction(s):
United Kingdom

FTT (Tax): share buyback satisfied CTA 2010 s 1033 'trade benefit' test; capital treatment applies; focus on company's purpose, not shareholder motives (Boulting v HMRC)

Published on: 03 November 2025

Published by a LexisNexis Tax expert

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Article summary

John Boulting v HMRC [2025] UKFTT 1272 (TC)

In this appeal, the FTT was asked to determine whether a company buy‑back of its own shares satisfied the trade benefit condition in section 1033(2) of the Corporation Tax Act 2010. The statutory test requires that the purchase is made wholly or mainly for the purpose of benefiting a trade carried on by the company, or by any of its 75% subsidiaries. Where that standard is met, the consideration given for the buy‑back is treated as capital in the hands of the shareholder for tax purposes.

The factual background to the buy‑back was largely common ground. Senior management were divided on the business’s future direction, notably around proposed investment in fixed assets to modernise premises and upgrade the organisation’s IT facilities. The transaction was pursued as a means of settling those differences by enabling the appellant, Mr Boulting, to retire and depart from the business. The company acquired eight of his shares for £4.8m, and he either gifted or transferred the remainder to members of his family. Advance clearance was obtained from HMRC confirming that, pursuant to CTA 2010, s 1033, capital treatment would apply to...

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