Mark McLaughlin highlights HMRC’s apparently stricter application of the rules regarding company purchases of own shares by multiple completion.
The purchase by a company of its own shares (e.g., from a retiring or dissenting individual shareholder) is possible where company law requirements are met.
For tax purposes, any payment in excess of the capital originally subscribed for the shares is normally a taxable income distribution, similar to a dividend.
However, there is a potential exception from this income tax treatment for unquoted trading companies. If certain conditions are satisfied, the individual vendor is normally treated as receiving a capital payment instead. Capital gains tax (CGT) treatment will often be more tax-efficient for the shareholder than an income distribution.