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purchase of own shares

Hi

Has anyone dealt with the tax and companies house procedure/mechanics regarding purchase of own shares by unquoted trading company within section 209 ICTA 88 (treated as distribution, not capital). I should be grateful for any advice/guidance in particular to what paperwork is involved, whether any HMRC clearance required and if shares need to be properly valued. The shareholder whose shares are bought out is non-UK resident individual.

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31st Dec 2012 13:30

POS procedure

For POS by private company out of distributable reserves, see:-

http://www.icaew.com/en/members/practice-resources/news/purchase-of-own-shares-out-of-distributable-reserves

Directors must certify that the purchasing company has, at the date of purchase, sufficient distributable reserves to cover the POS.

CGT treatment (for which HMRC can provide a clearance) is usually advantageous to the seller – why the dividend route here?

Shares need not be valued unless (exceptionally) the Articles of Association say so.  Valuation of shares in private Ltd companies is an arcane matter as they cannot be marketed.  If the price is totally unreasonable, HMRC could contend that the transaction is liable to IHT.

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