Entrepreneurs' relief: 5% ordinary share test

Ordinary share capital has the same meaning as in the Income Tax Acts (see ITA 2007 s 989); TCGA 1992 s 169S(5). HMRC's view is that it is the nominal value of the ordinary shares which must be considered for the five per cent test, not the number of issued ordinary shares; see CIOT Notice “Entrepreneurs' Relief—Technical points from HMRC forum”, 13 February 2012, Simon's Weekly Tax Intelligence 2011, Issue 7, p 366. See also www.tax.org.uk/media_centre/LatestNews-migrated/ER. HMRC confirm that the case of Hepworth v Smith [1981] STC 354; 54 TC 396 applies—the word “exercisable” means capable of being exercised, whether in fact exercised; HMRC Capital Gains Manual CG64050