First Special Commissioner's decision on Schedule 22: Ratchet rights must be intrinsic to the shares
Resource type: Legal Update: Case Report
Published on 05-Apr-2007
A company had to pay PAYE on the difference between its managing director's share sale proceeds and the market value of his shares, after losing an appeal to the Special Commissioners. Income tax may not have been due if the MD's enhanced sale proceeds had arisen from share rights in the articles, rather than a shareholders' agreement made after the MD got his shares.
Practitioners drafting "ratchets" and similar rights should make sure that they are intrinsic to the shares when acquired.
This was the first decision to test a charging provision introduced by Schedule 22, Finance Act 2003.
The full text of this resource is available by logging in or by requesting a trial. If you have any questions, please contact us or your Practical Law Account Executive.
A free trial will give you:
Unlimited access to our online legal know-how services during the trial period
Full training and support
Four issues of Practical Law The Journal, the companion to Practical Law online
Weekly update e-mails on current legal developments in your practice area