client had set up a ltd company in parents name as she was getting divorced (unknown to us)
the company is approx 6 months old and has had income of around £200k
he know wants to transfer the shares to herself but with no CGT for her parents.....possible?
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Of course it's possible
The possibilities are endless. If only there was a beginning - to some useful information being provided.
It sounds as though your client is potentially in contempt of court. Have you given full consideration to that and what your responsibilities are?
easy to do, impossible to explain
there are at least 3 ways I can think of, involving roll overs, SEIS's, and structured purchases. Each has an advantage depending on the personal situation of the relevant parties. if you want more advice just ask
Maybe as a first step you could make sure you know the gender of your client, who manages to shift from 'she' to 'he' to 'herself' in just a few lines.
Sorry to be frivolous, but as Ruddles says, there's nowhere near enough info to give any useful advice; and as john adds there may well be legal implications. Given the company has generated £200K in just 6 months from scratch, a few quid spent on expert legal advice will be money well spent.
Gift relief the likely candidate
https://www.gov.uk/government/publications/relief-for-gifts-and-similar-...
Or that on a proper examination of the facts it emerges that the client has always been the beneficial owner.....
Even better!
But that situation may be problematic in the event that the point in your initial post proves to be true.
Tongue in cheek
Even better!
But that situation may be problematic in the event that the point in your initial post proves to be true.
Yes indeed - my suggestion was largely tongue in cheek as there would have been no point making her parents shareholders if she was going to admit to having a beneficial interest - she might as well have kept an actual legal interest. The serious point the OP is ignoring is whether she denied having a beneficial interest (explicitly or implicitly) under oath or otherwise.
thanks for the comments, all good points and apologies if my typing isn't up to scratch!
the business has no assets other than cash in the bank as its a consulting company
hold over relief would be a potential option, but what would happen to the held over gain if the business isn't sold on by our client or if she just winds the company down over a number of years?
It can defo be done
The shares would be gifted so i take it no consideration passed. You would use SP8/92 and both the client and the parents would make the claim for gift holdover relief. This is done using the form on Help Sheet HS295. Both parties would make the claim. Time limits and process is in the help sheet. The shares need to be valued but it does not have to be a professional valuation and the value you use is not binding on either you or HMRC. The purpose of using the above is to avoid money spent on professional valuation fees
A problem I can see is that if the parents happen to pass away then the shares would obviously be included in the amount used to calculate the Inheritance Tax threshold. I believe as the shares are unlisted they may qualify for inheritance tax business relief at 100% if the shares are held within a trading company for at least 2 years before death. In this case they are clearly not (6 months) so i assume the 7 year rule would come into play but im really unsure so obviously double check.
regardless of the IHT liability then to answer your question ....... Using above NO CGT liability would fall on the parents as far as i can see based on the limited info on your post
The purpose of doing this means the base cost of the shares (if further sold or company wound down) is effectively the value the parent subscribed for them. I take it £1 ordinary shares or whatever the par value was at incorporation