I have a client, with many shareholders, 1 shareholder is going through a company buyback for the whole of there shares in the company and they will have no connections with the business moving forward, which I have gained clearance from HMRC to do so and they are on a payment plan to pay them the money back and a chunk of shares cancelled each tax year over 3 years, so that is all sorted but I now have another shareholder who wants to sell only some of his shares, receive two payments one in this tax year and the rest in the next, and then build his shares back up further down the line, I need to get clearance for this with HMRC, but Im wondering will it affect the agreement we already have in place with HMRC? This new proposal does meet all the criterias for the buyback and he will resign as a Director, but is he able to rebuild his shares back up and straight away or is there a time bar into which he has to wait before he can commence with any such transactions? Has anyone got any advice on this please?
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Why?
What price does he think he is going to sell them at compared to what he is going to 'buy' these shares back at?
No experience but difficult to see how condition A is satisfied.
https://www.gov.uk/guidance/clearance-applications-and-exempt-distributi...
Did you actually read the requirements given your answer to me above:-
Condition A: purchase benefiting a company’s trade
To be eligible to make a clearance application, the following must be satisfied:
- the purchase must be made wholly or mainly for the purpose of benefiting the trade carried on by the company or any of its 75% subsidiaries
- the shareholding interests of the seller and their associates in the company (and group, if appropriate) must be substantially reduced
- the seller and their associates must not be connected to the company after the purchase takes place
- the purchase does not form part of a scheme or arrangement where one of the main purposes is to enable the seller to participate in the profits of the company without receiving a dividend and/or avoiding tax
How does helping the shareholder fund his house renovation benefit the trade?
It also appears to be a scheme to allow the shareholder to extract funds without them being taxed as dividends.