Find out about clearance applications and how to apply to HMRC for advance confirmation of an exempt distribution when a company purchases its own shares.
A company wishing to make a purchase of its own shares can get advance confirmation from HMRC that the distribution arising will be an exempt distribution. Clearance applications are the responsibility of the Clearance and Counteraction Team.
The shares which are purchased by the company must have been owned by the seller for a period of: 5 years ending with the date of the purchase 3 years if the seller acquired the shares under the will or intestacy of a former shareholder, the seller’s or personal representative’s holding period is aggregated with that of the previous owner If the shares have not been owned for the relevant minimum period, payment will not qualify as an exempt distribution. Where the seller has made more than one acquisition of shares of the same class that are being redeemed, repaid or sold to the company, earlier acquisitions of shares are taken into account before later acquisitions. However earlier disposals are treated as being made on a last in, first out basis. This gives the seller the longest possible period of ownership for this purpose. You are selling 800 shares in 2014. You acquired the same class of shares in the following years: 2007 — 500 shares 2008 — 500 shares 2010 — 500 shares In 2011
details of the shares to be purchased the name of the present owner the purchase price and the number of shares to be bought details of any other transactions taking place between the company and the seller at or about the same time confirmation that the company is acting in accordance with Part 18 of the Companies Act 2006 details of how the payment will be made (for example, cash, cheque, bank transfer) and whether in full or in instalments details of the shares to be purchased, the name of the present owner, the purchase price and the number of shares to be bought details of any other transactions between the company and the seller at or about the same time confirmation that the company is acting in accordance with Part 18 of the Companies Act 2006 details of how the payment will be made (for example, cash, cheque, bank transfer) and whether in full or in instalments
Clearance applications and exempt distribution when a company purchases its own shares
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Find out about clearance applications and how to apply to HMRC for advance confirmation of an exempt distribution when a company purchases its own shares.
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