Divorce and hold-over relief

Morningfield

I'm the defender in a divorce action, where our matrimonial property is dominated by the value of my company. My wife owns 24% of the shares and I own 26%.

The settlement being considered is that my wife will retain the marital home and other assets, but that in return for transferring her 24% shareholding to me she requires a capital payment.

The transfer of shares would be by court order and the lawyers are proceeding on the basis that she will be able to claim hold-over relief.

I am being asked to make a capital payment that values the shares at their full value. But as the transfer is being made by court order, my understanding is that HMRC will consider that I have obtained them for nil consideration. Consequently when I dispose of the shares I will be required to pay capital gains on the full value of the shares, rather than any gain that may be made following the transfer.

I'm entitled to Entrepreneurs Relief but that still means for every £100 I pay for the shares I will only realise £90 on disposal.

The case law is apparently problematic in this area as it has previously been ruled that a future liability to CGT shouldn't normally be taken into account. My argument is that my wife incurs the liability at the time of transfer, but is then seeking to transfer that liability to me along with the shares.

The questions I have are as follows:

• Will HMRC consider that I have obtained the shares for nil consideration?
• Is the liability to CGT incurred by the donor at the time of transfer