Shares issued for services

Shares issued for services

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In the accounts of a small company for y/e 31/07/06 and turning over £350k I have an issue over the allotment of shares for past services. Does the debit entry for the allotment show as an expense in the P&L as per FRS20/IFRS2? If so does it show as remuneration to the directors/employees allocated the shares?
Christopher Pitson

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By User deleted
10th Aug 2006 10:32

Is it lawful?
What is the consideration for the issue of the shares-as I recollect my company law[admittedly a bit rusty]- there had to be a specific procedure where shares are issued other than for cash, to show that valuable consideration has been received of not less than the par value of the shares issued.
The tax position is quite simple-this is a schedule E receipt by the directors concerned of an amount equivalent to the market value of the shares issued.

There are some other problems, although if the figures are small they are probably academic.
This could be a 'transfer of value'for IHT but not a PET[IHTA s.98] by the current shareholders if the Directors concerned are not the same individuals as the current participators and/or a 'value shifting' disposal for CGT under TCGA s.29.

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