Question re transfer of assets between companies

Question re transfer of assets between companies

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I've been running a UK Ltd company which does two separate things under two different trading names. One is a service and one involves stock of which there is around 10k worth in value. 

The time has come to split these two enterprises into two so the idea is to make another Ltd company, each one then focussing on their specific area rather than one company doing both disparate things which has become very unwieldy. 

My question is this: for various reasons which need not concern us, the 10k stock needs to be in the new company. What is the best way to transfer this? Presumably I can't just 'give' it to the new company (or myself and thence to the new company? I am the sole director and shareholder). 

Ideally I'd like to somehow take possession of these assets myself and then input these to the new company. Is this possible?

Replies (14)

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By Accountant A
11th Jul 2018 12:06

segovius wrote:

one company doing both disparate things which has become very unwieldy.

Can you describe in what sense the arrangement is "very unwieldy" and how doubling up on banking, tax and accounting helps? Is the company VAT registered?

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By Portia Nina Levin
11th Jul 2018 12:12

You could pay yourself a stock dividend!

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Replying to Portia Nina Levin:
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By segovius
11th Jul 2018 13:03

How would that work? In relation to this asset?

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Replying to segovius:
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By Portia Nina Levin
11th Jul 2018 13:14

You just pay yourself a dividend of £10k of stock, pay tax on your £10K dividend and sell the stock to company B for £10k, which is left outstanding as a debt to you.

Can't see the point of paying the tax on it, but if that's what you want to do...

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By Ranse
11th Jul 2018 12:16

of course you cannot just give it away to the new company or take it away - the asset is not yours ( you are separate from the company ) the simple answer is Company A will be selling the asset ( inventory ) to Company B , there other complications involves as it seems you are trying to dispose part of the business to another entity (company B) , this brings so many other questions in the mix .... seek proper tax advise.

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By WhichTyler
11th Jul 2018 12:18

Why doesn't old co just sell the stock to newco?

Or is that too wieldy?

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Replying to WhichTyler:
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By segovius
11th Jul 2018 12:30

Wieldy would be good. It's unwieldy that's the problem.

I guess the major reason would be that Company B doesn't have the 10k.

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Replying to segovius:
By ireallyshouldknowthisbut
11th Jul 2018 13:03

That's one of the reasons you need to speak to a decent accountant. They will solve such problems in seconds.

I imagine the overall answer is "dont have a second company", and just deal with the complexity in a less dramatic manner. Eg better bookkeeping and possibly two bank accounts.

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Replying to ireallyshouldknowthisbut:
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By segovius
11th Jul 2018 13:15

Yeah but there are solid reasons for it.

How about this: is there a way I could take the stock - as a loan, say or other mechanism - from Company A and own it myself owing the money to the Company or paying back some shares or some way?

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Replying to segovius:
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By Accountant A
11th Jul 2018 13:35

segovius wrote:

Yeah but there are solid reasons for it.

Great. Can you elaborate?

Are you VAT registered and is the plan for both companies to be VAT registered?

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Replying to Accountant A:
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By segovius
11th Jul 2018 13:45

No, neither are. The second one might eventually be. Does it impact things?

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Replying to segovius:
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By Accountant A
11th Jul 2018 13:51

segovius wrote:

No, neither are. The second one might eventually be. Does it impact things?

Depends entirely on the circumstances.

Could you detail the rationale for the proposed split.

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By Portia Nina Levin
11th Jul 2018 14:00

This thread could be the most painful thing I watch all day. Too early to say though.

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Replying to Portia Nina Levin:
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By segovius
11th Jul 2018 14:12

Football is on later. If you're an Engurlund fan that's going to hurt more I guess.

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