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ARTICLE · 06 OCTOBER 2026

BADR On Exit: Don’t Let The Paperwork Undo The Deal

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A recent tribunal decision highlights how Business Asset Disposal Relief can be lost due to inadequate documentation of share voting rights, even when shareholders believed they held qualifying stakes. The case demonstrates that informal understandings and economic ownership are insufficient without proper legal documentation in company records and filings.

United KingdomTax
Rachel Hawkins
Rachel Hawkins
Adam Dolder
Adam Dolder
Francesco Palma
Francesco Palma
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Business Asset Disposal Relief (BADR) can still make a meaningful difference on an exit. For disposals from 6 April 2026, qualifying gains are taxed at 18% rather than the higher main capital gains tax rate of 24%, although the relief is capped at a lifetime limit of £1 million of qualifying gains.

A recent First-tier Tribunal decision is a reminder that BADR can turn on a very practical point: whether the rights attached to the shares were properly created, recorded and reflected in the company’s paperwork.

What happened?

In Katarina Poznic v HMRC [2026] UKFTT 01298 (TC), the taxpayer sold ‘B’ ordinary shares and claimed BADR. She understood those shares had the same rights as the founder’s shares, including voting rights. The paperwork said otherwise: the SH01 form recorded no voting rights, Companies House filings showed the founder holding more than 75% of the votes, and there was no clear evidence that the taxpayer had exercised voting rights.

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