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company buy back of shares

Wifes shares only

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Is it possible in a husband and wife Ltd company for the Wife who owns 40% to have all of her shares bought back by the company?

Is there an issue in that she will still be connected to the company afterwards via her husband (they are not getting divorced)?

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By Duggimon
15th Dec 2017 12:28

1) Yes

2) Why is being connected to the company an issue?

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By gbuckell
15th Dec 2017 12:32

The buyback can happen if you are happy that capital treatment will not apply. As you suggest, she is still connected post the buyback.

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By timothyvogel
15th Dec 2017 15:05

a, Yes
b, no issue in the same way if she had not already owned the shares. If she is a director or employee but apart from that no real issue
c, you do not ask but how much is she being paid, is it nominal value or fair market value. that could be a tax issue

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Replying to timothyvogel:
By Ruddles
15th Dec 2017 15:11

I suspect that you don't understand the OP's concerns re point b.

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By Jigs
15th Dec 2017 18:44

Am I right I’m saying CGT will not apply to distribution because she is connected to the company post transaction? I was hoping ER would be available on payment of £500k

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Replying to Jigs:
By SteLacca
15th Dec 2017 22:45

You need to get HMRC clearance regardless if ER is even an option.

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Replying to SteLacca:
By Ruddles
18th Dec 2017 11:52

No you don't. Advisable yes, but not necessary. (And in this case a waste of time.)

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Replying to Jigs:
Portia profile image
By Portia Nina Levin
16th Dec 2017 12:20

Norfolk v Chance.

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Replying to Jigs:
By Tax Dragon
16th Dec 2017 20:25

Jigs wrote:

Am I right... CGT will not apply

Yes. It's income, ergo no CGT.
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By David Heaton
18th Dec 2017 11:34

In company law terms, the company can buy back her shares, but in tax law it is a distribution to the extent that it is not a return of capital.

Before the POOS, she has an interest in 100% of the share capital, taking into account her husband's holding. After the POOS, she'd still have an interest in 100% of the smaller share capital, all via her husband. So you don't get near qualifying for capital treatment.

You would waste your and HMRC's time with a clearance application (but at least the reply should be quick).

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