The UK's Upper Tribunal has confirmed that certain cumulative preference shares can form part of the “ordinary share capital” of a company for tax purposes.

This comes as HMRC lost its appeal against Stephen Warshaw’s claim for Entrepreneurs' Relief (ER) – now known as Business Asset Disposal Relief (BADR).

Mr Warshaw claimed ER on the disposal of ordinary shares, ordinary B shares and preference shares in a UK company which he sold for cash of £6,665,332 in 2013.

His total shareholding represented 5.77 percent of the company. Excluding the preference shares, it represented only 3.5 percent.