CGT on transfer of shares to Holding company

CGT on transfer of shares to Holding company

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There are three individuals who have 6 separate trading companies in which they hold shares. The companies have been trading for 3 years.

They wish to transfer their shares in these companies to a Holding Company owned by them.

My understanding is that the transfer would be at Valuation, ie the shares would be valued and the HC would acquire them at the current value.

I should be grateful if someone could confirm my understanding.

Would the individuals be liable to CGT on the gain? 

If yes, would ER be available. Neither of the three is Director/Employee of any of the 6 companies, so probably not?

Thanks for any guidance.

Replies (7)

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By johngroganjga
04th May 2015 21:28

You don't mention what the consideration for the transfers will be. Are we to assume that it will be new shares in the acquiring company?

What proportions of the issued share capital of the six existing companies do the shares to be transferred represent?

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Replying to DJKL:
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By aadil
04th May 2015 23:34

No cash ...

There would be no cash consideration. Just shares in the new company.

100% of their shareholding in each company would be transferred. 

 

 

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By johngroganjga
05th May 2015 05:28

Thank you but I think you have misread my second question. I wasn't asking whether the six individuals were transferring all their shares - that much was implicit in your question. I was asking whether their shareholdings were 100% holdings or some lesser interest.

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Replying to DJKL:
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By aadil
05th May 2015 08:18

Sorry

I do apologise. I should have given full facts.

They are 100% holding in 4 companies. But in remaining two, they represent 80% and 75%.  There is another shareholder in these 2 companies who would not be transferring his 20% and 25%

Thank you for taking the time to advise.

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By johngroganjga
05th May 2015 08:39

Well the simple answer to your question is that you should check out the position about CGT holdover relief on the share for share exchanges.

Claiming ER on the gains is only relevant of the gains can't be held over. As you say, no-one can claim ER in relation to a company that they are not director or employee of. But are you really saying that we have three individuals with controlling interests in six companies, and not one of them of them is a director of any of them. That is most unusual. Why has not one of them chosen to appoint themselves as a director?

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By aadil
05th May 2015 10:36

HMRC Helpsheet 295 Relief for Gifts and Similar Transactions.

 HMRC Helpsheet 295 - Relief for Gifts and Similar Transactions.

 

 From reading the Section 'Which disposals qualify?' it appears that HO relief is not available where the transferee is a company.

 

Am I reading this correctly?

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By johngroganjga
05th May 2015 11:04

You seem to be looking at holdover relief on gifts of business assets. That is not relevant here.

What I said was look at "holdover relief on the share for share exchanges". When there is a share for share exchange the transferee is always a company.

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