Company formation - share capital not paid

What happens when share capital not paid?

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A similar question to the £10 Trust setups.

Quite a lot, we/I see companies formed with low share capital. You know the sort. £1 companies, £10 companies, maybe £100 companies. I rarely enquire too deeply but I don't often see share capital paid in these cases.

What happens to the share capital? The few occassions I've seen it, the £10 or whatever usually gets written off. So everyones a winner. The shareholders never pay the cash, and then claim a CT deduction for never having paid it as its in Cost of Sales.

Is this other people's experience?

Replies (5)

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By Peter Kilvington
12th Mar 2019 12:29

The cash is always being held in the petty cash tin ..... you are just not looking in the right place.

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Replying to Peter Kilvington:
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By DJKL
12th Mar 2019 12:44

Top shirt pockets- my other half reports she gets a steady income from checking my pockets before the shirts go into the washing machine ; we are guilty of money laundering if they are missed.

Underneath my car seat also tends to carry a £10 coin float, used to be the way I got the kids to hoover my car (you can keep what you find)

Plenty of places where the petty cash float may be not so safely kept.

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Replying to Peter Kilvington:
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By thevaliant
12th Mar 2019 12:58

When its a pound, I agree. I think when it's £100 it's often obviously not.

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By Jdopus
12th Mar 2019 14:25

If it's keeping you up at night just post it against the director's loan account.

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John Toon
By John Toon
13th Mar 2019 16:32

The real question is has the share capital been called rather than issued? If it hasn't been called technically there's nothing to pay until it has - that buggers up the double entry.

If it is called that call would normally determine when the amounts are payable. If all else fails the share capital that is unpaid has to be settled on a winding up or similar.

How many creditors would pursue this or whether HMRC would be bothered about these amounts being written off I don't know, but eagle eyed liquidators have picked this up in the past.

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