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Money Extraction from LTD Family Company Directors

Most efficient Money Extraction Ideas

We have a family company running for 25 yrs.  Owned by wife (a) /husband (b) who jointly own 480 shares, brother (c) owns 220 shares.  total share capital of 700.

The company has significant cash balance (1.5Mil) with directors only taking minimum salaries/drawings and dividends.  Annual net profits are approx 300-400K.  We have been advised and were on the assumption that keeping all monies in the company, only taking out what we need is the most financially sensible - as when we close it, it would be the most tax efficent).

Time has come where the (C) wants at least £300K of cash towards personal downpayment on moving to new house.   

Can anyone advise the best way for this to occur;  (a) and (b) have plenty of personal cash outside of family LTD company, but (c) doesnt.

Someone has sounded the idea of selling Company Shares to Holding company, in two equal parts.  (There are no personal issues with (a)and(b) accepting that they have 50% and (c) has 50%.  the only reason (c) has so little is simply because he joined the business much later.

I dont know much and i know i need advice but i need to understand some basic reasons for this and benefits; (a)+(b) dont need to draw / take this money out just yet, but it must be done formally so that it is equal to both entities (a+b) and (c).

Sorry for the confusing breakdown.

Any ideas would be greatfully welcomed.

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24th Oct 2017 05:33

Yes of course you need advice, but surely the first place to turn to for that advice is the company’s accountants.

A solution involving a new holding company might well be the way to go, but your idea that (c) can somehow take out cash and at the same time increase his holding from 22% to 50% is pie in the sky. That’s having your cake and eating it. But your accountants will advise.

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to johngroganjga
24th Oct 2017 11:33

duplicate

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to johngroganjga
24th Oct 2017 11:33

Quote:

Yes of course you need advice, but surely the first place to turn to for that advice is the company’s accountants.

Indeed but if you have hundreds of thousands of £, why not take the **** and ask for some free advice? It must be heading for 50% of the questions on here nowadays.

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By DJKL
to Accountant A
24th Oct 2017 11:52

And is a sad indictment on accountants that clients so mistrust their paid advisers that they instead come on here to deal with matters re important sums of money based on the consensus of a crowd of unknowns, with not a shred of PI cover available for later.

The most I tend to risk re online feedback is checking the reviews for food etc at a bar or restaurant and even then, when the meal is not up to the earlier review, I get well and truly p***ed.

Imagine what it must be like to implement something read on here only to be sitting across from Hector three years later because you did not really understand the nuances and had nobody looking over your shoulder when implementing the advice.

The other catch is free advice can do the person asking a disservice, my father always told me-charge family for advice, if you don't they will not value it which will likely be bad for them in the long run; there is more than a grain of truth in his argument.

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24th Oct 2017 13:15

Short arms and deep pockets - pay for some advice.

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