I have a close company share buy back to prepare - I will be using Inform Direct for the paperwork requirements -I do have a couple of questions if I may, if anyone can assist? I completed one of these a while back, but they qualified as a capital distubition, so I am just checking on the rules required as this buy back will be a distribution from profits.
4 Share holders - 1 Ordinary Share (Daughter 75%), 1 Ord A Share (Husband 8.33%), 1 Ord B Share (8.33% Parent 1) , 1 Ord C share (8.33% Parent 2)
2 shareholders are retiring - each parent owning 8.33% each. (Shareholders are not employee's or directors)
Ord B - Share holder - Owned 4 years and Ord C Share holder 3 years - Each receiving (consideration) of £25,000 for the buy back of shares.
They do not qualify for a capital distrubtions (so no capital gains tax relief available) as both S/H's did not owe the shares for the period of 5 years. Therefore I was thinking as the proceeds from the shares will be from distibution of profits (i.e a dividend) and not from a capital distribution. Can I show the buy back of shares at the nominal value of £1.00 per share ? Therefore the consideration being less than £1,000... and no stamp duty required and no stamping required by HMRC?
The remaining £24,999can then be shown as distrubtion through a dividend. This would then keep the accounting very straight forward.
If, this is not possible, please could anyone help with the accounting journals required - There is only 12 shares in Issue - £12.00 in share capital. No share premium. There is plenty of profit available for distribution.
Thank you in advance.