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HMRC internal manual

Capital Gains Manual

Entrepreneurs’ relief: time limit for onward sale of shares


CG64006 explains the circumstances where Entrepreneurs’ Relief is not available on a disposal of goodwill by an individual to a close company in which they hold shares. Relief will however be available if the individual disposes of the shares in the close company within 28 days of the disposal of goodwill.

The 28 day period may be extended at the discretion of the Commissioners for Her Majesty’s Revenue and Customs. The Commissioners have delegated to the relevant G7 technician the power to extend the time limits in certain circumstances. The First-tier Tribunal does not have any power to set aside a decision not to extend the time limit which has been made by the Commissioners.

The relevant G7 technician may allow an extension:

  • where the shares were sold not more than six months after the disposal of the goodwill and there are acceptable reasons for the delay.


If the shares were sold more than six months after the disposal of goodwill, the extension request must instead be considered by Capital Gains Technical on behalf of the Commissioners.

As an example, acceptable reasons might include:

  • obtaining permission from an external body (such as regulatory authority) to transfer the shares;
  • legal barriers in relation to the transfer of shares by the claimant to the purchaser.


An extension of the time limit in Section 169LA(1C) may be allowed where the claimant can demonstrate that

  • they had a firm intention to dispose of the shares to a known purchaser within the 28 day time limit



  • they were prevented by some fact or circumstance beyond their control from doing so within that time limit



  • acted as soon as they reasonably could after ceasing to be so prevented.


It is a question of fact and degree and each case is considered on its own merits. Examples of circumstances outside the claimant’s control might include death or serious illness of a vital party at a crucial time, unsettled disputes or litigation, genuine difficulty in obtaining permissions or finding a substitute buyer where the initial intended buyer does not complete.

A mere change of intention at a late stage will not normally be regarded as circumstances beyond the claimant’s control. Also, if the goodwill is transferred without a buyer for the shares having been identified, then difficulty in finding a buyer will not be considered an acceptable reason.

Board’s discretion

AUTHORITY TO REFUSE TO EXTEND THE TIME LIMITS HAS NOT BEEN DELEGATED. In all cases, the facts should be obtained and a judgement should be formed on whether the requested extension should be allowed (considering the acceptable reasons test as laid out above). In cases outside the authority of the relevant G7 technician, a report should be made to Capital Gains Technical Group with the recommendation of the relevant G7 technician and the claimant’s file. Before the report is made the criteria for extension should be explained to the claimant so that they can demonstrate their case.

However, no decision on a possible extension of the time limit can be made until the shares have been disposed of and all other conditions of relief are satisfied. A broad outline of the Board’s general policy on applications to extend the time limit may be given.