Ordinary share capital and cumulative preference shares

Zoe Arnautov and Gary Barnett’s article for Tax Journal discussing the meaning of ordinary share capital following the FTT decision in Warshaw.

This article was first published in the 31 May 2019 edition of Tax Journal who have agreed to Simmons & Simmons making it available on elexica.

The meaning of the term ‘ordinary share capital’ is important for a wide range of purposes within the UK tax code. The definition is generally broad but excludes shares which give a right to a dividend at a fixed rate and no other right to a dividend. The FTT in the recent case of Warshaw v HMRC has had the opportunity to consider this restriction and has held that cumulative preference shares were not caught by the exclusion. This goes against recently stated HMRC policy in the area and, as such, is a decision that should be approached with some caution as it will, most likely, be appealed by HMRC.

To read the article in full, click here.

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