How can we transfer shares for a ltd company?

Shares Transfer for a Limited Company

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Hello everyone, 

I would like to clarify my understanding of the shares transfer, between shareholders of a limited company. We have two shareholders, each with 50% of the shares of the company, and they both agree to transfer all the shares to only one of them, for a symbolic amount of 1£. Is it as simple as that, from valuation and tax perspective? Are we not supposed to assess the value of those shares to identify a potential gain for the one who give away the shares? And regarding the shareholders who now own 100% of the shares, is he supposed to declare those shares to HMRC as an income?

Also, let's say 1 year later, the only shareholder would like to get his business partner back into the company, and offer him to get 50% back of the shares. Is it possible to do exactly the same operation in the other way round? how this will be perceived by the tax man?

Thank you for your help!

Tommy

Replies (45)

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By Paul Crowley
21st Oct 2020 12:33

So many Anon

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paddle steamer
By DJKL
21st Oct 2020 12:42

I am throwing in the towel, enough is enough.

I refuse to answer ANY anon questions from today and also ANY accountancy and tax questions from people who evidently are not accountants will be ignored.

This I do pledge.

Accounting Web, if you want Any Answers to work you really need to rid us of this sort of question.

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Replying to DJKL:
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By frankfx
21st Oct 2020 12:49

Quote:

I am throwing in the towel, enough is enough.

I refuse to answer ANY anon questions from today and also ANY accountancy and tax questions from people who evidently are not accountants will be ignored.

This I do pledge.

Accounting Web, if you want Any Answers to work you really need to rid us of this sort of question.

lets put this to the vote

as they say in Chigago

''thank now , thank often''

thankyou

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Replying to DJKL:
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By Tax Dragon
21st Oct 2020 12:54

I think this post should be made a permanent Editors (sic) choice. Somehow editable so we can all put our names* to it.

*Noms de guerre, anyway.

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Replying to DJKL:
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By Mr_awol
21st Oct 2020 15:05

Quote:

Accounting Web, if you want Any Answers to work you really need to rid us of this sort of question.

Or stop complaining when we take matters into our own hands.

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RLI
By lionofludesch
21st Oct 2020 13:11

Well, I'm shocked.

What a lot of unhelpful people there are on this forum.

OP - what does your accountant say about this proposal ?

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By TommyAccountant
21st Oct 2020 13:29

I barely discussed it with him yet as I prefer to have infos and know what I'm talking about prior to go to talk with my accountant.

Not sure about the reactions from the others though ^^ sorry if I offended you!

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Replying to TommyAccountant:
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By Paul Crowley
21st Oct 2020 13:46

Aweb DID warn you before you chose Anon

What mislead is TommyAccountant

Edit
This could be embarrassing if you are Tommy the electricals man that keeps ignoring my emails

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Replying to TommyAccountant:
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By Mr_awol
21st Oct 2020 15:01

Quote:

I barely discussed it with him yet as I prefer to have infos and know what I'm talking about prior to go to talk with my accountant.

Sorry, but this excuse is trotted out fairly regularly on here, and most of us recognise it for the complete nonsense that it is. The other load of old cobblers we get is that people are 'just checking what their accountant has said'

Quote:

Not sure about the reactions from the others though ^^ sorry if I offended you!

If you are genuinely unsure then let me provide a brief summary.

You found a forum for accountants. It says its a forum for accountants and during the signup process it tells you that you'll have the opportunity to discuss issues with 'fellow accounting professionals'. You clearly knew this because you gave yourself a username that indicates you are an accountant, even though you now appear to admit that you arent.

Not satisfied with trying to deceive the community to further your goal of getting free advice, you then posted a question. During that act, there was a dropdown box to change the thread from showing your username to 'anonymous' Below that box there is a notice that anonymous postings are reserved for sensitive content, may not be answered, and that any abuse of the function will not be tolerated (HA). You then decided to post anonymously despite this - probably to hid your status as both a freeloader and a newbie.

You then ask why people are miffed and make a fake apology.

If you follow the usual pattern of behaviour behaviour your next step will be to report the posts of valued/knowledgeable users because they have been 'mean' to you. When that doesn't (appear to) work you will come back on and tell us all we are rude and unprofessional and would we talk to people like this if they came in our office as a prospective client (we may not - but what you people normally forget is that people wouldn't walk into the office and expect this for free). You will then tell us if we don't like your question we should suck it up and move on if we haven't got anything 'nice' to say. #BeKind and all that rubbish.

HOWEVER.

If, as i somewhat hope, this is a spoof account set up to demonstrate a perfect example of what some of us are fighting against, then:
1) It's quite a good one (but doesnt beat 'Breach of Condidentiality im' afraid)
2) It isn't Friday, which is traditionally the day for these capers - but we will let you off as it's topical currently and might not be so by Friday
3) You've caught some good fish

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Replying to Mr_awol:
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By Paul Crowley
21st Oct 2020 15:05

Says it all

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Replying to Mr_awol:
Psycho
By Wilson Philips
21st Oct 2020 15:14

You missed the final step - deletion of the question.

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By bernard michael
21st Oct 2020 13:37

The shares will have been deemed to transfer at the perceived market value for CGT purposes

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Replying to bernard michael:
Psycho
By Wilson Philips
21st Oct 2020 13:47

That’s a start, I suppose.

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Replying to bernard michael:
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By Tax Dragon
21st Oct 2020 14:09

bernard michael wrote:

The shares will have been deemed to transfer at the perceived market value for CGT purposes

There's actually not enough info in the OP for you to be able to say that with certainty. You're right (of course) that there's a CGT rule about transfers being at 'perceived' market value; other CGT rules exist.

But I'm not being drawn in. You give your partial answers if you want to. As I say, you can't know whether they are right. Nor can I. Nor of course can the OP. And that's the real point. Like Eric the Half a Bee, half an answer is really half not an answer. Or even no answer.

In short, I don't see the point of giving half (arsed) answers to half (asked) questions. I'm foursquare behind DJKL.

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Replying to Tax Dragon:
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By Tax Dragon
21st Oct 2020 14:16

Tax Dragon wrote:

I'm foursquare behind DJKL.

.oOWhere did that saying come from? Isn't foursquare 16?

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Replying to Tax Dragon:
paddle steamer
By DJKL
21st Oct 2020 14:40

Could it be masonic? I have no idea of its derivation/first recorded use, I am just musing.

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Replying to DJKL:
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By Tax Dragon
21st Oct 2020 15:33

OK well, I'm not doing anything masonic behind anyone. Sounds well dodge.

No answer is better than half an answer that might be wrong. That was my point. So by giving no answer you help more.

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Replying to Tax Dragon:
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By Mr_awol
21st Oct 2020 16:17

Quote:

OK well, I'm doing doing anything masonic behind anyone. Sounds well dodge.

I dont think you are allowed to at the moment anyway:
https://markmasonshall.org/mark-masons-hall-news/211-notice-of-a-general...

The Grand Poobah would take a dim view of anyone engaging in 'masonic activity' against official instruction. Let alone the fact that you are 'only' a woman*. Youve seen what happens in Shakespear in Love..................

** In their eyes, not mine. Only that is. Not a woman. Thats a matter of genetics. Or it was - who knows these days. Not that ive got anythign against gender fluidity. Oh crap im off before someone finds an excuse to see some sort of 'ism' in this post and i end up back sitting next to Terry Waite again...........

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Replying to Tax Dragon:
ALISK
By atleastisoundknowledgable...
21st Oct 2020 23:15

Quote:

So by giving no answer you help more.

Not sure many newbie OPs share that view.

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Replying to atleastisoundknowledgable...:
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By Tax Dragon
22nd Oct 2020 00:18

I'm not saying let's not try to help*, atlea. I'm saying that if you're trying to help (I'm giving bernard the benefit of the doubt), you don't do so by giving an answer that could easily be wrong. Of course, his answer this particular time could easily be right (though, as Wilson pointed out, even then it's incomplete); but I don't know it's right (I can't, from the information supplied); you don't; bernard doesn't; and I doubt the OP does. And what if it's wrong and the OP takes it as correct? So, IMHO, saying nothing is more helpful.

Of course, if I really wanted to, I could (on this occasion) help by explaining the various possibilities and hoping that one of them fits the OP's situation. That's probably a realistic thing to attempt in this case. It's not realistic on some of the questions that get posted here. But I don't really want to. And I consider that I have helped more than bernard with my approach, for reasons I thought I had (but now definitely have) explained.

*DJKL's suggestion is tantamount to saying he will try to help only recognisable professionals. Others should be hiring professionals to help. It's Sift's suggestion too - they've frequently suggested ignoring the questions you don't like. What normally happens though (sorry bernard, this is going to sound like I'm having a go at you... but I mean this more generally) is that some well-meaning professional attempts an answer which could be right but could just as easily be wrong, and is at best incomplete. In saying I stand squarely behind DJKL (yay, I've learnt what the older expression means!), what I mean is that this is the last thread where I step in to point out a bernardian error. (Subject only to the subject matter and discussion arising being of personal interest, which does happen about one time in a hundred - and has happened here, not because of the OP, but because of Middle England. Or Middle English. To misquote Python.... BIRMINGHAM! What did I say that for?!)

Thanks (1)
Replying to DJKL:
Psycho
By Wilson Philips
21st Oct 2020 15:08

I don't know if the Masons were around in the 13th century (thought they were slightly later), but:

"Origin of foursquare - First recorded in 1250–1300, foursquare is from the Middle English word fouresquare"

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Replying to Wilson Philips:
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By Mr_awol
21st Oct 2020 15:21

Quote:

I don't know if the Masons were around in the 13th century (thought they were slightly later)

Surely masons have been around since the stone age?

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Replying to Wilson Philips:
paddle steamer
By DJKL
21st Oct 2020 16:27

Is foure maybe from Norman French? Does it mean four or something else?

Anyone here remember any French, I was useless when I passed my O Grade 44 years ago and am a lot worse now.

There are certainly masons around in the early Norman period, anyone who has read Ken Follet's "Pillars of the Earth" will certainly remember them as they feature significantly . (I enjoyed the book)

Not sure how organised they were but certainly you would likely have guilds with levels/positions, from apprentice upwards.

The only reason I suggested masons is that regular shapes seem to play a part and four square suggested to me right angles, in addition masons are supposed to help one another so foursquare behind might fit. Frankly I know very little about them, my uncle was a Master of one of the Edinburgh lodges but he tended not to chat about them.

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Replying to DJKL:
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By Tax Dragon
21st Oct 2020 16:31

.oOWhat have I started?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
21st Oct 2020 16:45

A discussion that is far more interesting than much of the drivel around here, including some (not all) of those so-called 'interesting' case decisions ;¬)

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Replying to Tax Dragon:
paddle steamer
By DJKL
21st Oct 2020 16:55

Could be a new Any Answers feature, "Phrase of the Day"

Its akin to these diary pad things where each day has a new phrase.

I remember my father having one but his was in Latin so whilst he and my two older sisters could read it, I, as the dunce of Latin ,19= out of a class of 20, could not.

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Replying to DJKL:
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By Tax Dragon
21st Oct 2020 17:16

There's the difference between me and you... I'm thinking Joey (and his word-of-the-day toilet paper); you're quoting Chaucer.

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Replying to DJKL:
paddle steamer
By DJKL
21st Oct 2020 16:32

Did You Know?

"Early English speakers liked to use foursquare to describe a rectangle with four equal sides, even though they could also say it was simply "square." They also used three-square to describe a triangle with equal sides, five-square for "having five equal sides," six-square as an alternative to "hexagonal," and eight-square for "octagonal." Eventually foursquare also developed a second sense, which is used to describe persons and things that stand out "squarely" and forthrightly. One can now speak of "foursquare citizens" and "a foursquare response." Foursquare can also be an adverb meaning "solidly" or "forthrightly.""

https://www.merriam-webster.com/dictionary/foursquare#:~:text=Time%20Tra...

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Replying to DJKL:
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By Mr_awol
21st Oct 2020 22:43

Quote:

Did You Know?

"Early English speakers liked to use foursquare to describe a rectangle with four equal sides, even though they could also say it was simply "square." They also used three-square to describe a triangle with equal sides, five-square for "having five equal sides," six-square as an alternative to "hexagonal," and eight-square for "octagonal."

Whereas our friends across the pond prefer hendecagons, obviously.

(Foursquare plus seven)

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Replying to Tax Dragon:
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By Paul Crowley
21st Oct 2020 15:12

My guess
Four square as in like a solid four squared building

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Replying to Paul Crowley:
RLI
By lionofludesch
21st Oct 2020 15:23

Quote:

My guess
Four square as in like a solid four squared building

No.

It's to do with Battenburg cake.

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By justsotax
21st Oct 2020 14:13

If you do use an accountant he is likely to charge the same whether you have a clue about what you are talking about or not....he will do a fact find to establish what has actually happened and is unlikely to merely take your word for it if he can establish what has factually happened.

For this service it is unlikely to cost you anymore (or less) than had you gone to him with some idea of what was to happen, as in order to reduce his costs he would have to assume some of the details you provide are correct, when in good practice (and as a good professional would do), he would actually look to confirm those figures through supporting documents etc where possible.

He will also explain how this all works, because that is what he has trained for, to be able to work out what the implications are and if the client is really interested how that works (in layman terms).....

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By Tax Dragon
21st Oct 2020 15:27

Somewhere above an e dropped off the end of Shakespeare and fell into the middle of foursquare.

If Kings did that, dictionaries (and maybe the authorship of 40-odd plays) would have to be updated.

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Replying to Tax Dragon:
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By Mr_awol
21st Oct 2020 16:16

I blame the bluetooth keyboard. My posts are littered with 'missig' and 'transopsed' letters.

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By Tax Dragon
21st Oct 2020 16:43

What an educational thread!

Thanks, OP :-)

So, Lion, a Battenberg cake is fourfoursquare, because it has four foursquares.

Or foure fouresquares, if you live in Middle England.

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Replying to Tax Dragon:
paddle steamer
By DJKL
21st Oct 2020 17:06

All over England, surely, it is merely Middle English

"WHAN that Aprille with his shoures soote
The droghte of Marche hath perced to the roote,
And bathed every veyne in swich licour,
Of which vertu engendred is the flour;"

I devoted my whole final term in Eng Lit 2 to Chaucer and other fabliaux, in hindsight one really must ask why.

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Replying to DJKL:
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By Tax Dragon
21st Oct 2020 17:14

For this thread? (Today thou shalt shine.)

Or maybe tomorrow... I don't want to do my learning all at once.

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Replying to Tax Dragon:
RLI
By lionofludesch
21st Oct 2020 17:22

Quote:

So, Lion, a Battenberg cake is fourfoursquare, because it has four foursquares.

Or sixteensquare.

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Replying to lionofludesch:
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By Tax Dragon
21st Oct 2020 17:27

Oh read the thread, Lion. A sixteensquare would be a regular hexadecagon.

Or 256, on my initial (incorrect, apparently) thesis.

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Replying to Tax Dragon:
RLI
By lionofludesch
21st Oct 2020 17:34

Quote:

Oh read the thread, Lion. A sixteensquare would be a regular hexadecagon.

Or 256, on my initial (incorrect, apparently) thesis.

True.

There is an infinite number of regular polygons.

But there are only five regular solids.

Very mysterious.

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Replying to lionofludesch:
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By Tax Dragon
22nd Oct 2020 12:24

https://en.m.wikipedia.org/wiki/Four-dimensional_space

Paragraph headed 'Geometry'.

That's even more mysterious - the number increases again in 4D.

(But mostly I liked the pretty pictures.)

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By Cheshire
21st Oct 2020 19:39

This has to be the best response to a certain type of thread in a long time. Gave me such a laugh.

Dare I suggest, any such similar threads, the first responder does a 'quote' of the full Q, then posts 'see here for your answer' and posts a link to this thread.

Will save everyone an awful lot of typing and the usual unaswered speculating etc.

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Replying to Cheshire:
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By Paul Crowley
22nd Oct 2020 03:38

If the post is Anon then I see no problem with the Anarchy of thread being owned by last poster.
Some have now become wildly entertaining and in reality someone always gives the simple response needed so that OP still wins
Here Bernard gave the real answer, But not usable without an accountant's further input to get the details correct according to Ops specific circumstances.

I say that as a regular Anon first responder
A couple of time I have quoted and by push button time, someone has beaten me to it so edit back to a simple comment.

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Replying to Paul Crowley:
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By Tax Dragon
22nd Oct 2020 10:39

I'm bored now. So I'm out after this comment. Suffice to say that, with five question marks and reference to two taxes in the OP, I fail to see how "The shares will have been deemed to transfer at the perceived market value for CGT purposes" could ever be described as "the real answer". Even though you just did that.

But - let me spell this out one last time - the danger for the would-be helper (and, more importantly, the would-be helpee) is the subconscious assumptions that s/he, the helpful professional, might make due to familiarity with certain tax rules. These assumptions are dangerous because s/he does not realise how they influence his/her reading of the question. (And, with an anonymous question, it may be hard to tell what, if any, tax rules the querist knows about.)

Using this OP as a convenient example, let me put two scenarios to you, each consistent with the facts presented: bare trust; spouses. You (and bernard) probably discounted these as irrelevant. Why? (I've alleged due to subconscious assumption. You can put me straight.) But how correct does "the real answer" look to you now?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
22nd Oct 2020 12:29

Here's another couple of 'scenarios' which might influence the "real answer":

Trading company
Employment/office

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