Moving Customers & Trade Between Companies

Transfer assets and trading business from one company to another

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What is the easiest, cheapest and most tax efficient way to move the trading name/website/active subscriber customers from one Limited Company (of which the client owns 100% of shares) to another Limited Company (of which they own 100% of shares)?

I've looked at a Members Voluntary Liquidation, as well as 'gifting' the shares from one company to the other using Gift-hold over relief to defer any Capital Gains tax  and then transfering assets as an intra-company Dividend. 

The purpose of the transaction is that the Director wants to run two trading names under one Limited Company and keep a better handle on finances/accounts by having one Limited Company structure instead of two. 

Company A (is over a year old with trading history and journal) will be the 'host' company, and Company B (8 months old but with trading history and journal but no accounts filed yet) will be the company 'absorbed' for want of a better word into Company A. 

Both are Flat Rate VAT registered. 

Appreciate any advice or thoughts? 

Replies (7)

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By accounting128r
28th Sep 2022 22:42

I should add, to the above for clarity:

- No BBL or loans taken for either company, so no liability for either company on that side of things.
- Both companies have different 'brands' within the marketing sphere, one owned by each Limited Company.
- Sole director and shareholder in both companies.
- No unpaid creditors on either company.

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By SteveHa
29th Sep 2022 08:47

Create a holding company and do a share for share exchange for the shares in each of teh two companies. Then assets can be passed between them without incident.
Don't forget a S77 relief claim.

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Replying to SteveHa:
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By nrw2
29th Sep 2022 09:49

Though inserting another (holding) company may make the problem worse: "The purpose of the transaction is that the Director wants to run two trading names under one Limited Company and keep a better handle on finances/accounts by having one Limited Company structure instead of two."

Company A could purchase Company B via a share exchange (to avoid creating another (holding) company), hive everything up to Company A (over time, if required) and then liquidate Company B?

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Replying to nrw2:
By SteveHa
29th Sep 2022 10:11

That would do it and achieve the same end result. Only the journey is slightly different (my way taking the more scenic route).

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Replying to nrw2:
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By accounting128r
29th Sep 2022 12:08

Much appreciated, it's looking like a share exchange will be the path of least resistance.

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VAT
By Jason Croke
29th Sep 2022 08:55

Both are flat rate registered? Be careful, if the conditions for a VAT group can be met (person of significant control is the same in both companies), then flat rate scheme cannot be used. Depends on the precise facts, so read the links to see if they apply to the situation.

Appreciate the question asked is about moving all activity into one company, my post is just looking at the current/past situation.

https://www.gov.uk/government/publications/vat-notice-733-flat-rate-sche...

https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs6100

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Replying to Jason Croke:
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By accounting128r
29th Sep 2022 12:07

Much appreciated on the extra considerations. We've studied this and looked into it and believe the arrangement doesn't form a VAT group from what we've found. But we'll be looking into it again and seeking further advice.

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