Ltd Company Buying Own Shares and Transferring Assets

Ltd Company Buying Own Shares and Transferring...

Didn't find your answer?

Hello...I hope you can help.
My husbands runs a small acoustic consultancy and he has a limited company with Jim (very small in terms of assets, about £2,500k balance sheet value in total). They are going their separate ways and partner Jim will start a new company and my husband will keep the existing one. The company (if we can) will buy Jim out of his shares for the same consideration as he pays for his share of the assets that will then be reinvested in his new company. I think I have a handle on the company law side of things in terms of forms etc. For our purposes the value of the assets and the shares are one and the same.The assets are:-

The assets have both a NBV and a TWDV of circa £950 for Jim's half share.

The assets are probably worth more than that (albeit so specialised we would struggle to find a reasonable value - they started off at £15k 7 years ago, so an £7.5k investment each) and I understand any amount over and above this will give rise to a chargeable gain in 101 accounts (being the amount Jim pays for the assets) less NBV.

The amount that Jim receives for the shares could also give rise to a personal capital gain I believe or an income tax liability? Using the NBV of £950 could be seen as a bargain at arms length by HMRC.

Winding the company up would also give rise to capital gains for us as individuals.

I just wanted to run this past people for advice and whether or not I am missing something. The hope is here to avoid unnecessary taxation in what is effectively a restructure from one company to two companies.

Many thanks

disposal of assets - £1,000 - Jim pays cash to 101 giving rise to a capital gain of £50.

Profit on disposal Balance Sheet  
  DR CR  
Bank 1,000 7,088  
Accumlated deprec 6,142 54  
  7,142 7,142  
       
DR P&L chargeable gain 54    
        

Buy shares from P&L reserves.

CAPITAL & RESERVES     B/fwd    
Called Up Share Capital     100 (50) 50
Profit & Loss Reserves B/Fwd     2,063 (1,000) 1,063
Capital Redemption Reserve       50 50
Profit & Loss Account         881
           
SHAREHOLDER'S FUNDS         2,044 

Replies (3)

Please login or register to join the discussion.

avatar
By GuestXXX
17th Mar 2015 17:39

.

 

Thanks (0)
Replying to Richard Grant:
avatar
By Emster
01st Oct 2014 17:57

Does that mean a no then :)

Thanks (0)
avatar
By GuestXXX
17th Mar 2015 17:40

.

 

Thanks (0)