Partners incorporating individually
The members of an LLP are thinking of incorporating fully, but not as one limited company. Instead, each will transfer his share of the business to his own personal company, leaving a partnership comprising entirely of corporate partners - a 'CT partnership'.
They will not claim any deferral in respect of the disposal of their shares of the business and will pay the 10% CGT, thereby generating a loan account. That's the idea, anyway.
On the face of it, the figures look pretty good for a business at this level of profit, as each corporate partner draws a modest dividend to use up the basic rate band and draws the rest of his income needs as a loan repayment. Even after the loan accounts are gone, there is still a modest tax saving to be had year on year.
The use of corporate patners creates a number of (hopefully!) unconnected companies, all of which are small for corporation tax purposes - incorporation of the whole business would create a company liable for the full rate of CT.
I am aware that this structure will reduce flexibility as far as a future sale of the business to a third party is concerned. Other than that, is anyone aware of any restrictions or pitfalls to the proposed structure?
Many thanks in advance for any comments.
- Sage Instant Accounts Complete De-install problem 90 3
- Credit against UK NI for NI paid to EEC Countries 229 1
- will this work for IHT 250 2
- Best software for small practice? 633 20
- Paid too much !! 252 2
- Auto enrolment confusion 1,744 39
- I am 34 years old, am I too old to start a career in Accounting ? which is the best way to pursue it 256 7
- Taxfiler been down since mid-afternoon 205 5
- Anyone having problems with Taxfiler 483 17
- Gifting Shares to a Limited Company 120 1
- Company separation for Wholesale & Retail businesses 98 1
- Selling a VAT Qualifying vehicle at a loss 100 1
- Paying dividends to Ordinary shares with different nominal values 477 15
- 2012 13 HMRC QUERY 750 11
- Sports Sponsorship 151 1
- New Shareholder and Purchase of Own Share 268 17
- Opt To Tax Refund 214 2
- Divorcing husband, both 50% owners of a Ltd business 255 6
- Is the CT61 return dead? 1,330 14
- How did you recalculate your payroll fees 1,275 21
- Self employed and HMRC Worldwide Subsistence Rates 768
- Interest paid - do new rules affect Tax Credits? 455
- Market Invoice (P2P invoice discounting) tax treatment 276
- DTA tie-breaker issue 263
- Tax on internet ad sharing income 248
- CGT for NOn UK residents 223
- Apprenticeship Levy 203
- What are the tax implications of overseas sales through a UK based company? 192
- Capital Gains personal representatives 182
- Just checking re PSA 175