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.
- Enforcing A CCJ 159 4
- Quarterly PAYE 26 1
- Value pricing 442 15
- SDLT - transfer of land into newco 101 4
- Personal Service Company 77 2
- Employment Allowance - Doctors Private Secretaries 83 1
- SA Return issued after P800 received 102 5
- Multiple PAYE Schemes 74 1
- More than one Employment Allowance ? 103 1
- Auto enrolment 254 4
- What password safe app does anyone recommend? 1,160 25
- Sage Payroll 188 8
- Sale of shares and ER 65 2
- Laptop purchase 1,139 19
- VAT on Gaming Machines 242 1
- Payroll software : RTI submissions 123 3
- VAT 94 1
- Auto enrolment 332 5
- Adjusting over-provision of Corporation Tax in previous year 129 4
- Fee's for P11D's 171 1
- Residential Property Purchase Above £750K 753
- Using Sage with Sofa Categories 513
- Does anyone have an unwanted ICAEW wooden plaque? 381
- One man Company and closing payroll scheme as none paid 359
- Goods shipped inter EU and VAT Reporting 271
- Sage 200 and Access Dimensions reviews 209
- Non-Resident Director - UK Tax Position? 208
- transferring simply accounting 2010 from xp to windows 7 187
- Director Loan account operation 180
- vat return 155