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Merging two UK LTD companies

Can two 100%-owned UK limited companies be merged?

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Mr X owns 100% of Company A and 100% of Company B. Both are standard UK limited companies. Company A is VAT registered and has a loss making (-£20kpa) trading business and accumualted trading losses of £60k, plus financial investments of low 7 figures. Company B is not VAT registered and has financial investments of 6 figures.

There are no loans and no other features of the companies. They are now shells with cash accumulated from previous trading activities, which have ceased. The remaining small trading activity in Company A is from trying to start up a new business, but it hasn't taken off. In future, the combined entity would need be able to contain a trading activity, and cash which it can invest.

Can the companies be merged in any way to simplify accounting, and so that the owner does not incur a taxable event on selling the shares of Company B to Company A? Thank you.

Replies (9)

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paddle steamer
By DJKL
16th Aug 2021 14:30

How recently did trading activity cease?

Can he get BADR on his shares if winding up one or other or both? If not investigated/considered I would do so without delay to avoid any risk of possible future legal action for poor advice. Right now there may (there may not) be a window for low cost cash extraction that ought not be ignored.

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Replying to DJKL:
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By Edward Stein
16th Aug 2021 22:48

Thank you for your answer.

Company B has been an investment company for 5 years.

Company A was last a fully trading company 2 years ago.

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By Leywood
16th Aug 2021 14:39

Your MR X aren't you?

What does your Accountant say.

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Replying to Leywood:
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By David Ex
16th Aug 2021 14:42

Leywood wrote:

Your MR X aren't you?

What does your Accountant say.

From previous posts, the OP seems to have an accountant who isn’t very good at dealing with the OP’s issues so he is forced to seek free professional advice from strangers.

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Replying to David Ex:
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By DKB-Sheffield
16th Aug 2021 15:29

... and, it is 12 months since the OP first reached out for advice. Time a plenty to find a replacement, or look for an additional specialist.

If I was in a position where I had 2 companies (1 with £100Ks investments and the other with £1Ms investments) and I didn't know what to do, I would seek paid advice from a specialist. I certainly wouldn't entrust it to a forum full of strangers - regardless of how good or relevant the answers may be!

Would anyone seriously expect mediWEB to diagnose and cure a serious illness based on a few snippets of information? (don't answer that, I think the answer is "probably some would")

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Replying to DKB-Sheffield:
ALISK
By atleastisoundknowledgable...
16th Aug 2021 17:35

DKB-Sheffield wrote:

Would anyone seriously expect mediWEB to diagnose and cure a serious illness based on a few snippets of information? (don't answer that, I think the answer is "probably some would")

No, we use Dr Google. Mrs ALISK is regularly using him to diagnose all sorts of horrendous / terminal illnesses from an e.g. nose bleed. It’s like Hugh Laurie is playing Dr Google.

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Caroline
By accountantccole
16th Aug 2021 15:21

[quote=Edward Stein]

 "plus financial investments of low 7 figures. Company B is not VAT registered and has financial investments of 6 figures."

This needs proper planning - use some of the financial investments to pay for bespoke planning work?

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Replying to accountantccole:
paddle steamer
By DJKL
16th Aug 2021 16:31

Be careful if said planning is for the owner and his/her shares etc using company funds to pay for same.

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By Paul Crowley
16th Aug 2021 20:25

If my client I would phone my paid for help line
Then charge client for the cost of call and my time

Blowed if I would trust some random strangers with big figure stuff

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