A client gifted all the share capital of a business he owned to a trust four years ago. At the time of the gift, the business had a value of approx £1m. The business also owed him £900k.
Since the gift was made the business has stopped trading (lost a couple of exclusive supply contracts) and is effectively worthless. The only thing on the balance sheet is the £900k still owing to him. He would like to set up another trade through this company in the hope that it makes money and can repay the loan (as this would be more tax efficient than salary and dividends at the higher rate)
However getting access to credit etc is difficult because of the way the offshore trust is set up and the difficulty in getting through AML checks.
My question is, as a settlor can not take assets back out of a trust (at least in this case he can't) can he buy the shares back from the trust even though he gifted them in the first place? The company is basically worthless and so a nominal transaction sales price of £1 would be agreed.
Other information: the client is a non-dom UK resident, the trust was set up 25 years before residing in the UK, beneficiaries are his children who are all tax resident in the UK.