Understanding anti-avoidance measures for close companies

Multiple-choice questions: In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again

  1. Why are there anti-avoidance measures in place for the sale of close companies?

  2. How were close companies and their owners previously able to avoid tax?

  3. What is a close company?

  4. How might the Finance Act 2017 affect a partner leaving a business and wanting her shares to be bought out?

  5. What do many management buy-outs involve?

  6. What is an earn-out?

  7. When do the provisions of the Finance Act 2017 not apply?

  8. Why is it critical that all agents understand the implications of the anti-avoidance measures?

  9. Why should persons selling a close company seek to achieve CGT treatment for the transaction?

  10. Which statement best describes why it is no longer possible to avoid tax by executing a management buy-out?