The Upper Tribunal (Tax and Chancery Chamber), the UK's
second level tax appeal court, have just published their judgement
in the McQuillan case, which considered whether shares
with no right to dividends or any other profits are or are not
"ordinary share capital" (OSC) for UK tax purposes. There
are a number of UK tax rules that depend on how much OSC is held,
and OSC is defined as all share capital except for any share
capital that carry a right to a dividend at a fixed rate and no
other right to share in the company's profits. This decision
concluded that such shares are OSC.
There has been uncertainty about whether shares with no rights
to a dividend were or were not OSC – based on whether they
had a right to a dividend at the fixed rate of 0% (not OSC) or
carried no right to a dividend at all (OSC). HMRC's published
position has been historically that shares with no right to a
dividend were OSC. The position was thrown into confusion in 2016,
however, when two
