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Share Buyback by the company and cancellation

Share Buyback by the company and cancellation

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Dear All

Small company preparing accounts FRS102 s1A has bought back shares from one of the shareholders and subsequently cancelled these. The shares were issued at nominal value of £1 and has been bought back for 6 figure sum.

I need to clarify couple of points from company's perspective for this buyback:

1. There is no doubt the transaction will reduce reserves but need to understand whether this needs to go through Income Statement or will simple be posted as "purchase of own shares" within reserves without affecting Income Statement

2.  For CT purposes, would this be treated as capital loss?

Thanks

 

 

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18th Mar 2019 14:35

My understanding is that the purchase is dealt with wholly within movement on capital/reserves and doesn't touch the Income Statement.

There is no capital loss for CT purposes (it is the shareholder, not the company, that has made the disposal - with no corresponding acquisition by the company).

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By kashpat
to Wilson Philips
18th Mar 2019 14:46

Perfect. Thanks

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By johnt27
19th Mar 2019 13:09

The accounting is all dealt with in the SOCIE which will be required this year and next (for comparative purposes). It can be filleted for filing purposes.

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