Taxation magazine queries ― capital extraction of profit

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Overview

The following guidance note provides details of queries raised on the extract of profit on the winding-up of a company in the last few years in the Readers’ Forum section in Taxation magazine with a link to the full replies. It should be noted that the response to the queries is at a point in time and all relevant legislation should be confirmed as being currently applicable.

BADR on trading of quoted shares

The business of this close company is the trading of quoted shares. The husband and wife, who are directors/shareholders, carry out around ten transactions per annum, spending around five hours a day, following a specific work pattern of analysing and assessing and selecting the characteristics and merits of individual companies. Each transaction (purchase or sale) has a value of around £150,000.

There have been net gains from sales for the last few years of an average of £300,000, on a portfolio cost and market value of £5m and £20m respectively.

The couple have no other business interests,

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