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?