In Tenconi v HMRC [2021] UKFTT 107 (TC) (13 April 2021) the FTT held that the taxpayer was chargeable to capital gains tax on a disposal of the beneficial interest in guarantee rights in a company and that the gain did not qualify for entrepreneurs’ relief (now known as business asset disposal relief).
MAH Ltd was a company limited both by share capital and guarantee rights. Its articles of association provided for two classes of members: shareholder members and investor members. Shareholder members held shares which carried no voting rights but were entitled to dividends up to the lower of the profits and £2 000 (apportioned according to total shares). Investor members held ‘distribution rights’ each of which cost £100 and carried general voting rights and an entitlement to a share in the profits available for distribution in excess of £2 000. Ownership of shares could be transferred but there was no provision...
