In Seamus Kavanagh v HMRC [2022] TC08500, the First Tier Tribunal (FTT) found that an individual holding 4.997% of a company was unable to benefit from Entrepreneurs’ Relief on its sale. There was no evidence of other shareholders holding any shares on trust for Mr Kavanagh.

A condition which had to be met for Entrepreneurs’ Relief to apply to the disposal was for Badger to be Mr Kavanagh's 'personal company' for the 12 months ending with the date of disposal. This meant he must have held at least 5% of its ordinary share capital and voting rights.

Mr Kavanagh argued that the other Badger shareholders held 0.002714293469% of the other A shares on Trust for him, meaning that he was the beneficial owner of 5% in total and, therefore, met the condition for Entrepreneurs’ Relief.

The FTT found that

The appeal was dismissed.


This case is a useful reminder that company shareholders should regularly review their circumstances, particularly in advance of a sale, to ensure they meet the precise conditions for any tax relief that they may wish to obtain.

Had Mr Kavanagh owned only one more share in Badger, he would have met the 5% condition necessary to benefit from Entrepreneurs’ Relief.

Entrepreneurs' Relief has since been renamed Business Asset Disposal Relief.

Useful guides on this topic

Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of shares or securities in a company
When can you claim Business Asset Disposal Relief (BADR) on a share sale? What is the rate of Business Asset Disposal Relief (Entrepreneurs' Relief)? How do you claim BADR? What case law is there on BADR?

Issuing new shares (planning and pitfalls)
A practical guide on how to issue new shares in a company together with a summary of some of the pitfalls if an issue fails to qualify for tax purposes.

Case Study 7: Creating a group by share for share exchange
What are the steps for creating a group by way of a share for share exchange? 

Share capital: What's an ordinary share?
What is an ordinary share? Why is it important?

An index to Capital Gains Tax reliefs
There are numerous Capital Gains Tax (CGT) reliefs in the UK: when do they apply and what are the conditions for relief?

External link

Seamus Kavanagh v HMRC [2022] TC08500

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