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How to remove dormant parent company?

Hi

I have a client who created a dormant parent company last March (before they were a client) and continue all their trade in one subsidiary.  They now want to simplify and we are still within the first year of the parent structure.  They want to strike off the parent company just leaving the trading sub. 

How do I go about this?  Do I have sell the parent shares to the sub and does this create a potential capital gains situation?

Any advice much appreciated.

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Care!

Many years ago a client in this situation decided unilaterally to swap the shares around so that the shareholders owned the sub directly and the sub now owned the former parent. Based on the tax rates at the time we estimated that the potential tax bill exceeded the value of the companies!!! HMRC had started to sniff around. I never heard what the final outcome was!

If the parent is struck off you have

1. Disposal of sub at market value

2. Distribution of value of sub to shareholders (hopefully capital distribution but possibly income)

Could be a lot of tax for a very limited benefit.

Probably the only thing that can be done is to transfer the trade to the parent and, perhaps, swap company names. Given that the parent was only formed last year, this may cause commercial problems (lack of track record) and so be inadvisable.

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