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COMPLEX SHARE DEAL: DO YOU KNOW THE RIGHT WAY?

HCO LTDI S OWNED BY TWO DIRECTORS: AND OWNS 100% OF SUBCO LTD.

THE COST OF SUBCO'S SHARES WAS THE VALUE OF HCO ON INCORPORATION AND WAS THE CAPITAL INJECTED INTO THE BUSINESS ON COMMENCEMENT/INCORPORATION BY THE TWO OWNER DIRECTORS(WHO OWN THE SHARES OF HCO)

THE SHARES COST £250,000.

THEN :THE DIRECTORS WANTED TO WIND UP HCO AS IT HAD NO ROLE OR COMMERCIAL PURPOSE.

THE DIRECTORS SHARES IN HCO WERE TECHNICALLY WORTH 250,000

ONE DIRECTOR RECENTLY MARRIED AND WANTED TO LOCK IN THE SPOUSE (WITH LIMITED RIGHTS) SO SUBCO ISSUED FIXED DIV PREF B SHARES TO THE SPOUSE WITH NO VOTING CONTROL FOR NIL CONSIDERATION.    

HOW IS THE VAULE/COST OF THE HCO SHARES LOCKED INTO SUBCO SO THE DIRECTORS HAVE SOMETHING TO SELL IF THEY FIND A BUYER?

OR WILL THE HCO SHARES BECOME WORTHLESS? WHILST THERE WILL BE TRADING ASSETS IN SUBCO?

CAN THE SHARES(AS THEY ARE THE DIRECTORS INVESTMENT IN SUBCO(THROUGH HCO) BE VALUED AS INHERENT PURCHASED GOOD WILL IN SUBCO?

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First things first

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@Penny

... at least it wasn't in BOLD.

I love the piccy, I may just pinch it for future use  :)

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All possible...

...just really hard to read the capitals.

You can do some form of share for share exchange or even a hive up I would imagine. Really one would like to see the accounts and understand the history a bit better, so this is not ideally answered in a forum. If you contact me I am happy to take a closer look.

Virtual tax support for accountants: www.rossmartin.co.uk

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thanks ross

i think i have heard you speak........like rebecca!

i am more at the risk/damge limitation stage now and have moved on from planning. 

The holding company has/had no role so we wound it up.

 

Our issue arises around the carrying forward of the director/shareholders(previously of the holding company)/(now of the subsidiary)cost/value of their investment.

the shareholders are the same but instead of holding shares in the holding company they now own directly the shares in the subsidiary.

the disposal of the subsidiary's shares by the holding company was completed before the esc16 claim under the SSE exemption rules.

i.e. the holding company technically sold its shares at book value to the individual directors.)on a no gain/no loss basis-thats my theory. but there is not a clear tax trail to show the shares were worth 250k(except if we went down the cg34 procedure to get a judgement and I doubt if we will)

 

technically the esc16 negates any value of the holding company's shares because normally an esc16 election is associated with a disposal for cgt purposes under a "negligible value" claim.

no negligible value claim has been made by either of the director shareholders.

any more you can say or will you need a fee to take it further?

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and....

come to think of it as it is an SSE disposal the gain can be of any size and will NOT trigger a corp tax liability.........

 

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