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Winding Down on Ratchets

John Watson and Tom Cartwright of Ashurst write about HMRC's revised guidance on 'Post-Acquisition Benefits from Ratchets'
The document revising the guidance on 'Post-Acquisition Benefits from Ratchets' released by the HMRC on 21 August (the 'New Release') is the latest eruption caused by the meeting of two of the great tectonic plates of tax. The first of these is the generous capital gains tax regime for business assets introduced by the present Government in 1998 and improved by the Finance Acts 2000 and 2002. Under that regime the vendors of shares in a private trading company pay tax on their capital gains at an effective rate of as low as 10%. The second is the payroll tax regime (the term 'payroll taxes' is used in this article to cover the combined impact of income...

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