Company merger

Merging 2 companies owned in equal proportions

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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.

 

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By Hugh Jarssis
15th Aug 2016 13:35

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.

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By WhichTyler
15th Aug 2016 13:38

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...

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