Generally, the value transferred by a close company must be apportioned amongst all the participators in the company, other than those who participate only as loan creditors1, according to their respective rights and interests in the company immediately before the transfer2.
The expression 'rights and interests' is not defined, except that it is provided that it includes any rights and interests of the participators in the assets of the company available for distribution amongst them in the event of the company's being wound up, or in any other circumstances3. In the common case of a company with only one class of share capital, the apportionment is made simply according to the number of shares held. Where there are several classes of share capital, with differing rights as to capital and income, apportionment is likely to be a matter of negotiation with HMRC. HMRC's Shares and Assets Valuation division is responsible for all decisions in connection with the application of the legislation4.
This rule is intended to produce
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