Sale of shares on retirement - Ask an expert

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Q: Our clients, Mr and Mrs Mortimer, hold all the shares in a trading company, Mortimer Ltd, which they formed in 1995. It continues to be profitable, and owns some valuable plant and machinery, although it is not taking on new contracts. Mr and Mrs M formed a trading company (Mortimer Services Ltd) with their son in 2004, holding the shares equally, and it is this company which is developing into a very profi table business. The trades in the two companies are complementary, with the new company providing many of the services that are also provided by the older company. Mr and Mrs M want to reduce their involvement in the businesses, and to begin this process they have proposed that Mortimer Services Ltd ('Services') buys all the shares in Mortimer Ltd ('Mortimer'), using its own funds. They would then claim entrepreneurs' relief on the sale of the shares. In due course, they will sell their shares in Services to their son. Mr and Mrs Mortimer have asked us to confi rm the tax position.

The answer to this question was provided by Paul Howard, Director, Gabelle

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