HMRC are writing to individuals who have ceased to be Persons with Significant Control (PSC), according to records held by Companies House in the 2021/22 tax year reminding them that disposals can lead to reporting requirements and Capital Gains Tax (CGT) to Pay.

A Person with Significant Control (PSC) is a person who owns or controls a company.

But a PSC on the Companies House register is necessarily the same as the Beneficial Owner for AML purposes

Who is a PSC?

An individual will be a PSC if they meet one or more of the following conditions: 

  Company Limited Liability Partnership (LLP)
1 Holds directly or indirectly, more than 25% of shares Holds rights over more than 25% of surplus assets on a winding-up
2 Holds directly or indirectly, more than 25% of voting rights Holds more than 25% of the voting rights
3 Holds directly or indirectly, the right to appoint or remove the majority of the board of directors Holds the right to appoint or remove the majority of those involved in management
4 Has the right to exercise, or actually exercises, significant influence or control Has the right to exercise, or actually exercises, significant influence or control
5 Holds the right to exercise, or actually exercises, significant influence or control over a trust or firm (not a legal entity) which would satisfy one or more of conditions 1 – 4 if it were an individual Holds the right to exercise, or actually exercises, significant influence or control over a trust or firm (not a legal entity) which would satisfy one or more of conditions 1 – 4 if it were an individual

 

HMRC are sending letters to remind such individuals that where there has been a disposal which has resulted in them losing significant control, a declaration may be required on Self Assessment Tax Returns and Capital Gains Tax may be due.

It is an offence for Companies not to maintain and update their PSC records online: changes should be notified and failure to provide accurate information on the PSC register and failure to comply with notices requiring someone to provide information are criminal offences and may result in a fine and or a prison sentence of up to two years.

Useful guides on this topic

Register of Persons with Significant Control (client briefing)
What is the Register of Persons with Significant Control (PSC)? Who must complete it? How must it be completed? Who is a Person with Significant Control?

Register of Persons with Significant Control (subscriber version)
What is the Register of Persons with Significant Control (PSC)? Who must complete it? Who is a Person with Significant Control? What details must be included on the Register?

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?

Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of a business
Entrepreneurs' Relief (ER) was renamed Business Asset Disposal Relief (BADR) by Finance Act 2020. When does BADR apply? What is the rate of BADR? How do you claim BADR? What BADR case law is there?  

External links

Persons with Significant Control: Capital Gains Tax on the disposal of shares


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