43 Disposition by or to a company

Summary

This section provides that, in the event of a disposition being made, or a gift or an inheritance being taken, by a private company as defined in section 27, or in the event of consideration being paid to or by the company, the beneficial owners of shares and of certain entitlements in the company will be treated as disponers, donees or successors or, as paying or receiving the consideration, as the case may be, in the proportions as the specified amounts (as defined) relating to their beneficial interest in the shares and entitlements bear to each other.

Where shares and entitlements are held in trust and there is no ascertainable beneficial owner, a disposition made, or consideration paid, by a company is considered to have been made or paid by the disponer in relation to the trust property.

Details

(1) “company” means a private company within the meaning of section 27;

“market value” means—

• in the case of a person’s beneficial interest in shares and entitlements, the market value of that interest on the date of the payment, disposition, gift or inheritance, as the case may be, ascertained by reference to the market value on that date of the shares and entitlements in which the interest subsists, and
• in the case of a share in which a beneficial interest subsists, the market value of that share ascertained in the manner described in section 27 as if, on the date on which the market value is to be ascertained, it formed an apportioned part of the market value of a group of shares consisting of all the shares in the company issued and outstanding on that date;

“share” has the same meaning as it has in section 27;

“specified amount”, in relation to a person’s beneficial interest in shares and entitlements, means—

• in the case of consideration paid, or a disposition made, by a company, a nil amount or, if greater, the amount by which the market value of the beneficial interest was decreased as a result of the payment of the consideration or the making of the disposition, or
• in the case of consideration, or a gift, or an inheritance taken by the company, a nil amount or, if greater, the amount by which the market value of the beneficial interest was increased as a result of the taking of the consideration, gift or inheritance (as the case may be).

(2) A disposition made, or consideration paid, by a private company is to be treated as made or paid by the ultimate shareholders and by certain creditors.

A gift or inheritance, or consideration taken, by a private company is to be treated as taken or paid by the ultimate shareholders and by certain creditors.

The apportionment of the benefit given or received by the company is based on the proportions which the specified amounts relating to the shareholdings bear to each other.

(3) For the purposes of subsection (2); all acts, omissions and receipts of the company are deemed to be those of the beneficial owners of the shares and entitlements, referred to in subsection (2); in the company, in the proportions mentioned in that subsection.

(4) Where one of the shareholders is itself a company, the company is looked through in the same way as in subsection (2).

(5) Where the shares in question are held in a discretionary trust, consideration paid, or a disposition made, by the company in question is treated as paid or made, as the case may be, by the person or persons who settled the property in the discretionary trust.

Relevant Date: Finance Act 2015