In a proactive submission, the CIOT is seeking clarification of HMRC’s position on whether non-cumulative shares with a fixed-rate dividend would still be regarded as ordinary share capital for the purposes of ITA 2007 s 989.
HMRC’s Company Taxation Manual at CTM00514 had previously stated that fixed-rate, non-cumulative shares would qualify as such, but the current position appears to be that any type of fixed-rate share would not, regardless of whether it is cumulative or not. The Institute also questions whether HMRC have revised this guidance because of the Upper Tribunal decision in Warshaw vHMRC [2021] STC 247. Interestingly, in the final of its clarificatory questions (para 2.5), the CIOT highlights a distinction between preference shares (covered in Warshaw) and ordinary shares, potentially leaving the door open to the possibility of fixed-rate, non-cumulative ordinary shares being considered as ordinary share capital.
In a proactive submission, the CIOT is seeking clarification of HMRC’s position on whether non-cumulative shares with a fixed-rate dividend would still be regarded as ordinary share capital for the purposes of ITA 2007 s 989.
HMRC’s Company Taxation Manual at CTM00514 had previously stated that fixed-rate, non-cumulative shares would qualify as such, but the current position appears to be that any type of fixed-rate share would not, regardless of whether it is cumulative or not. The Institute also questions whether HMRC have revised this guidance because of the Upper Tribunal decision in Warshaw vHMRC [2021] STC 247. Interestingly, in the final of its clarificatory questions (para 2.5), the CIOT highlights a distinction between preference shares (covered in Warshaw) and ordinary shares, potentially leaving the door open to the possibility of fixed-rate, non-cumulative ordinary shares being considered as ordinary share capital.
