Apart from halving the small companies rate band (and doubling the annual admin), are there any other tax implications from the following?
1. Client sets up NewCo and transfers shares in OldCo to NewCo in exchange for shares in NewCo, so that NewCo becomes holding co.
2. Business is transferred from OldCo to NewCo, except for leases, which are retained by OldCo (the resulting subsidiary).
3. NewCo (holding) carries on the business and rents the premises from OldCo (subsidiary).
OldCo rents the premises to NewCo at zero profit/loss.
Replies (3)
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Other way round
Your supposed to transfer the property to New co and then rent that to old co.
Then, if the business goes down, New co is protected.
VAT specialist will "bang the drum of VAT group regn" but don't. For the same reason.....ie if oldco goes down.
Purpose
Is the purpose to ringfence the trade & keep onerous leases in the subsidiary? Just be careful as the lease agreement almost certainly requires landlords consent to sublease