INDIVIDUAL SELLERS – CAPITAL GAINS TAX

Three individual sellers of their healthcare business seek insurance to obtain equality of tax treatment for the three individuals.

Two individuals are UK tax resident and one is resident in another European country. Under UK rules, the UK individuals could obtain Entrepreneurs’ Relief to reduce their liability to capital gains tax. The advisers to the third individual also believe their client could access a similar exemption although the position was less clear.

As the three individuals had founded and expanded the business together, they want to ensure they all ultimately had the same net return from the sale of that business. They therefore pay for a policy to cover the risk the third individual is in fact subject to capital gains tax at the full rate.

The premium is a small percentage of the tax at stake and provides cover for the Capital Gains Tax, interest, penalties and defence costs.

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