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Company purchase of own shares (CPOS) – HMRC and the ‘clean break’

Shared from Tax Insider: Company purchase of own shares (CPOS) – HMRC and the ‘clean break’
By Lee Sharpe, July 2022

Lee Sharpe warns of a change in HMRC’s stated position, which has taken many by surprise. 

Many readers will be familiar with the regime where a company buys back its own shares but, by way of background, a company purchase of own shares (CPOS) is a useful device that can help people exit or retire from a profitable company without the other owners having to lay out significant cash in the process.  

Example: Just Dance Limited 

Beyoncé and Jason – who are otherwise unconnected – have been equal founding director-shareholders in a successful London dance studio for more than a decade, but Beyonce wants to retire and move to Scotland to pursue a career in viniculture. Her 50% stake in the company is worth around £500,000; Jason is happy to carry on running the business on his own but would struggle to raise £500,000 personally, to buy Beyonce

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