How can you protect shares in a family business on divorce, asks Anna Heenan
In Shield v Shield [2014] EWCA Civ 1136, the Court of Appeal was called to decide upon the beneficial ownership of shares in a family company. The case demonstrates how tax planning and asset protection concerns can conflict and highlights the need to be mindful of both when advising a family business.
The company in question was RA Shield Holdings Limited (RASH). It was formed in 2005 after the husband’s previous company was restructured to revive its fortunes. Tax advice upon restructuring provided that if the husband retained control of the business until his death, his shares would attract business property relief for the purposes of inheritance tax and that there would be an uplift in the base cost of his shares for capital gains tax purposes. At the time of the restructuring, both the husband and wife intended to leave their shares to their son, Christopher, and made wills doing so.
Following the restructuring, the shareholdings in RASH were:
- Husband: 15,108 A shares
- Wife: 1,660 B Shares
- Christopher: 17,011
