CG51759 - Reorganisations of share capital: compensatory open offers (COOs): tax treatment of compensation payments
The provision of compensation payments to non-subscribing shareholders is a key feature of open offers with compensation (see CG51757). Companies may try to ensure that their shareholders suffer no tax charge at the time of the open offer. A common way of doing this is to arrange matters so that cash compensation payments are capital distributions within the scope of in the hands of the non-subscribing shareholders, and furthermore that they are 바카라 사이트˜small바카라 사이트™ so that subsection (2) applies. For guidance on the meaning of 바카라 사이트˜small바카라 사이트™ in this context see CG57835+. Guidance on is at CG57800+.
A compensation payment will by definition be 바카라 사이트˜in respect of바카라 사이트™ the shares in the company, and so the first condition in will be met. Whether the payment is also a capital distribution will depend on the facts of each case. It is likely that it will be, but you must have regard to the definition of 바카라 사이트˜capital distribution바카라 사이트™ (see CG57800+) and hence the meaning of 바카라 사이트˜distribution바카라 사이트™ given the facts of each case.
The third condition in is that the capital distribution must be received by the share-holder 바카라 사이트˜from the company바카라 사이트™. In order to decide whether this condition is met you will need to trace the path taken by the compensation payment before it reaches the shareholder, and to understand the functions of each of its beneficial and legal owners. It may be that the payment never in fact passes through the company바카라 사이트™s own hands, but that an agent or trustee receives the premium of the rump share subscriptions (see CG51757) and then is compelled by the company바카라 사이트™s instructions or the terms of a trust to pay the appropriate amounts to shareholders. Where the agent or trustee has no discretion in this regard, and no-one but the company ultimately directs their actions, you may accept that the distribution is received from the company for the purposes of . In cases of uncertainty, or where this view is contested, please refer your case with evidence of the form of the transactions, to the Capital Gains Technical Team.