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Help with SSE and ER

Holding company of a trading group

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As part of the SSE and ER rules I understand the importance of being either a trading company or a HoldCo of a trading group.

i am also aware of the 20% indicators in terms of investments and the

possible issue around the trading status of a company.

I have a new client who is a ‘holding company’, the background is as follows:

it holds some land which was purchased 8 years ago on the hope that planning permission would be obtained on the land and it would be sold, this may happen next year.

it holds shares in two trading companies, owning 50% of one and 45% of the other

its only source of income is the receipt of dividend from both companies.

My immediate thoughts is that it is not a holding company of a trading group, but in anticipation of a future sale and possibly one company over the next 12 months, I am trying to think of what could be done for the company to become a trading company or HoldCo of a trading group. My current thoughts are as follows:

instead of receiving dividends, charge a management charge for their time working in one of the companies.

transfer land to stock from investments.

Purchase 1% shares in company on which it owns 50%.

 

Does anyone else have any thoughts? 

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05th Aug 2018 10:52

Being a holding company of a trading group is a pre-requisite for ER to apply on the sale of shares in it, but not for SSE to apply to the disposal by it of an investment in a trading company.

If you look at the ER and SSE conditions separately all will probably become a lot clearer.

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By Jigs
to johngroganjga
08th Aug 2018 07:50

Thanks John, I get it now, the key point being:

The investor company making the disposal must be a trading company or a member of a trading group.

Member, rather than holding company.

any thoughts regarding the issues I have around qualifying for ER?

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