Business owner loses tax relief on sale over how her shares were recorded at Companies House
A tribunal has refused Business Asset Disposal Relief on a company sale because official records showed the seller's shares carried no votes. Why it matters for anyone planning to sell.
A business owner has lost Business Asset Disposal Relief (BADR) on the sale of her shares because of how they were recorded in the company’s official records. Accountancy Daily reported the relief at stake as worth around £462,000.
What happened
In Poznic v HMRC, decided by the First-tier Tax Tribunal, the seller owned all the ‘B’ ordinary shares in an architectural practice. She sold them and claimed BADR, believing her shares carried the same rights as the founder’s, including the right to vote.
But the company’s statutory records, including its filings at Companies House, showed that the B shares carried no voting rights. Without clear evidence to the contrary, the tribunal decided the company was not her “personal company” for BADR purposes, and refused the relief.
Why it matters
To qualify for BADR when selling shares, you generally need to have held, for at least two years before the sale:
- at least 5% of the ordinary share capital
- at least 5% of the voting rights
- an entitlement to at least 5% of the profits and assets, or of the sale proceeds
You also need to have been an officer or employee of the trading company throughout that period.
The case shows that what matters is what the legal records say, not what the shareholders understood or intended. Many owner-managed companies create different share classes over the years, for family members, key staff or tax planning, and the rights attaching to them aren’t always clearly documented.
What to do
If you might sell in the next few years:
- Check your company’s records now. Ask your accountant or solicitor to review the articles of association, the share register and the statements of capital filed at Companies House.
- Make sure every share class’s rights are written down and match what everyone believes them to be.
- Fix any gaps early. Because the conditions must be met for two years before a sale, problems discovered during a deal may be too late to fix.
With the Budget due on Wednesday 28 October, and reports that BADR could be scaled back, check how any changes affect you too.
Read more: Budget 2026: what owners selling a business should know before Wednesday and What is my business worth? How buyers value a UK company
Source: Poznic v HMRC [2026] UKFTT 1298 (TC). Exit Index provides general information, not financial, legal or tax advice.