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Cumulative preference shares were ‘ordinary share capital’

By Mark McLaughlin, July 2019

The taxpayer’s holding of cumulative preference shares constituted ‘ordinary share capital’ for the purposes of the entrepreneurs’ relief ‘personal company’ definition as they did not carry the right to a dividend at a fixed rate.  
 
Summary 
 
The taxpayer’s holding of cumulative preference shares constituted ‘ordinary share capital’ for the purposes of the entrepreneurs’ relief ‘personal company’ definition (TCGA 1992, s 169S(3)), as they did not carry the right to a dividend at a fixed rate. 
 
Background 
 
In December 2013, the appellant disposed of his entire shareholding in a company of which he was a director. His shareholding comprised 44,183 ordinary shares, 396,000 preference shares and 24,660 ‘B’ ordinary shares. 
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