In M McQuillan and E McQuillan v HMRC [2016] UKFTT 305 (5 May 2016) the FTT found that shares which do not carry any right to dividends are shares which carry a right to ‘a dividend at a fixed rate’.
ITA 2007 s 989 defines ‘ordinary share capital’ as ‘all the company’s issued share capital (however described) other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the company’s profits’. The issue was whether the words ‘a dividend at a fixed rate’ included shares the holders of which have no right to any dividend. If the answer to that question was affirmative 30 000 redeemable shares issued to other investors were excluded from consideration when determining the company’s issued share capital. Therefore the McQuillans held more than 5% of the ordinary share capital...
