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.
- Go Cardless 227 8
- business entertaining deductibility 77 1
- Disengaging a client who uses our office as a registered office address 741 17
- Self assessment tax arrears 73 2
- Scottish independence - what happens to HMRC? 871 51
- R & D 88 3
- Are HMRC cutting out Agents in tax investigations? 205 1
- Shareholder/Directors termination payments 54 1
- Childcare vouchers and final month payroll Qs 90 2
- Can anybody help withe the RTI end of year process? 115 3
- Payroll software with annual pay period? 101 1
- New Business Registration 201 5
- Audit rules 129 3
- Hosted email exchange 115 4
- Excel formula for UK corporation tax including losses 131 1
- G P life time allowance 99 3
- Why will HMRC not code out my client's £1,730 underpayment for 12/13 359 11
- Bringing money to Uk 202 3
- How can I tell what returns are outstanding on HMRC online? 113 1
- Accounting for investment club gains 105 2
- Xtuple 497
- Qtac payroll for bureau 332
- Confused - Professional Association a Mutual trader, or not? 276
- Industrial & Provident Societies 272
- Mehjoo 215
- Data transfer from Sage Line 50 to VT Transaction+ 214
- New strategic report 168
- Domain name sale and limited company 153
- South African Government Pension 148
- CIS schemes 143