We act for a manufacturing company X Ltd which has a t/o of £4m with a balance sheet value of £200k. There are two unconnected directors. Mr A owns 75% of the shares and Mr B owns the remaining 25%.
The directors own a second company Y Ltd which has a t/o of £3m and a balance sheet value of £300k. This is owned in the same proportion; Mr A owning 75% of the shares and Mr B owning 25%
The directors have now decided that they wish to merge the companies. Their intention is for company X Ltd to take over the assets of company Y Ltd and to continue trading. Afterwards company Y will be dissolved
Each time I look at this I am coming up with a different answers
How should this be dealt with in respect of the tax implications and the accounting treatment.
Replies (2)
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Piece of piee. Does either company have trading losses to carry forward?
You can either use TCGA 1992, s. 135 and s. 171 or you can use s. 136 and s. 139, to end up in the same place.
Or, if either company has an existing subsidiary (or you want to wait a year) and one of the company's has chargeable assets that you want a base cost uplift for you could use s. 171, SSE, s. 171, although you might not get clearance.
Whose accounting?(A,B,X or Y)
Whose tax?
Will Y be paid for its assets?
And goodwill?
If so, how much?
Is there an SPA in place?
I could go on...