Since entrepreneurs’ relief was introduced in 2007 as a replacement for taper relief, successive governments have sought to close loopholes and reduce its scope.
For example the Targeted Anti-Avoidance Rule aimed to stop ‘Pheonixism’, whereby a going concern was closed, the owners only paid 10% tax on the cash they had accrued and then simply starting again with the same customers, same building and so on.
They have also taken on those business owners who have left cash in their business, hoping to pay the reduced rate of tax upon sales of the business when they, for example, retire.
These are only two examples. There are many pitfalls and complexities relating to entrepreneurs’ relief. For example, who can claim relief? What qualifies? Is your client running their business assuming they will qualify for relief when in fact they could be in for a shock, owing more than they think. Conversely could they improve their position?
Tax Adviser provides concise insights into specific queries from accountants with respect to entrepreneurs’ relief.