editorial

Tax status clear as mud

• FROM: July 2006 |
• TAGS: inheritance tax |
• COMMENTS: Add yours

• Tax status clear as mud
• | Printer-friendly version

Tax breaks are a great incentive to invest in AIM but like most things in life you don’t get the benefits without some pain.

In the case of inheritance tax in particular, the pain is trying to work out whether a particular company is eligible for Business Property Relief.

It’s a topic that has become pertinent again this month with confusion about the status of over-the counter markets and what actually constitutes a “recognised exchange.”

Investors need to know which companies qualify for the tax breaks but Revenue and Customs won’t help. It is loathe to commit itself to anything while neither it nor the London Stock Exchange publishes any kind of list of eligible companies.

Some observers suggest one possible solution is to put the onus back on the companies themselves. When it lists, a company could have an IHT approved stamp.

Alternatively, if it is dual-listed on a bona-fide stock exchange, which is the case for many companies that have fast-tracked their way onto AIM from another exchange, that could be made clear at the outset.

Of course, one of the problems with this is that most companies themselves don’t know, especially as the rules applicable to this area are complicated. Perhaps checking the tax status of a company should be one of the responsibilities of the Nomad.

Circumstances also change frequently for companies so there is never going to be a definitive list that stays correct forever.

But it would be a help if there were a list that was at least true for the date it was published that investors could check if they are thinking of investing in a company. But, like England winning the World Cup, that is unlikely to happen soon.

The onus, therefore, is going to remain on investors to remember that the status of any company can change and if it gets a dual listing on another stock market it will lose its eligibility for IHT.

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