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Consortium Relief

Structuring a group to claim loss relief

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My client has a profitable company and is planning to set up a similar business with another individual who will be a working director of Newco, share split 60/40.  Newco will incurr lossess at start before becoming profitable.My plan is to set up a holding company which my client owns 100%. The holding company will own 100% of exisiting company and 60% of Newco. The other shareholder/director will own 40% but if structure is also through a  separate holding company my exisiting client company can claim consortium relief of 60% of losses.  The new holding company for the 40% does not need to claim lossses which can be left in Newco to offset future profits. Does this work or am I missing something?

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By paul.benny
17th Dec 2021 16:17

Absolutely not the question asked...
Make sure the arrangement between the parties is fully documented and they have shareholder agreements for Newco. In particular, it should address what happens once Newco becomes profitable - probably worth mapping that out on paper so that everyone understands it.

And also not the question asked...
Have you considered your potential conflicts of interest, specifically regarding minority shareholder in Newco?

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