UK Businesses Call For Clarification Of Tax Rules On Substantial Shareholding Sales

by Jason Gorringe, Tax-News.com, London

28 June 2002

According a report from the Accountancy Age news service, many UK businesses are holding back on the sale of substantial shareholdings and subsidiaries due to uncertainty over measures included in Chancellor Gordon Brown's April Finance Bill.

In his budget, Mr Brown announced a provision designed to give tax relief to companies selling substantial shareholdings and small subsidiaries, however, the provision also incorporated anti-avoidance legislation designed to prevent the abuse of this provision, and according to Accountancy Age, it is this that is the source of the confusion.

Speaking to the accounting magazine, Richard Baron, Head of the Policy Unit at the Institute of Directors revealed that there are fears that genuine trading operations could lose out on tax relief:

'Not many transactions have gone through because people are aware of the problem so if they are really uncertain they will have held back. If the govenment makes it clearer it will encourage more people to use the relief,' he explained.

According to the report, a clear statement of practice on the issue has been promised by Treasury Economic Secretary, Ruth Kelly 'in due course'.

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