Your manager has sent you the notes she prepared following a meeting with Pippin, an established client of your firm who is resident and domiciled in the UK. The notes together with an email from your manager are set out below.

Meeting notes from your manager – dated 8 June 2017

Shares in Akero Ltd
Pippin owns 16,000 shares in Akero Ltd which have a current market value of £4·50 per share. Pippin subscribed £16,000 for these shares on 4 January 2015. Pippin obtained income tax relief of £4,800 (£16,000 x 30%)under the enterprise investment scheme (EIS) in the tax year 2014/15. He also claimed EIS deferral relief in that year of £16,000 in relation to a chargeable gain on the sale of a painting. Pippin is considering selling 5,000 of his Akero Ltd shares in order to fund his personal expenditure during the start-up phase of the Pinova business.

Extract from an email from your manager – dated 8 June 2017
Please prepare a memorandum for the client files which addresses the following issues:

(iii)Sale of shares in Akero Ltd
Explain the tax liabilities which would result if Pippin were to sell 5,000 of his Akero Ltd shares in the tax year 2017/18.

Tax manager

(iii) Sale of shares in Akero Ltd.  (6 marks)