When value is shifted out of shares owned by either a
controlling shareholder or a person connected with him and into
other shares, the value shifting rules in section 29 TCGA come into
play - and the transaction is treated as a disposal for CGT
purposes.
Example:
A controlling shareholder has 75 shares. His son has 25 shares. He redesignates his 75 shares as preference shares, thereby shifting value into the 25 shares which are now the only ordinary shares in the company.
Not only should you notify the Inspector when you become aware of such a transaction but you should also take advice on whether (subject to business relief considerations) a claim to IHT has arisen under s.98 IHTA 1984 from the SAV specialist on that legislation.
| Additional Guidance: SVM150000 |
