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Share Capital Reduction


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Company has 100,000 £1 Shares in issue and has retained profit of £30k so net assets are £130k. Are they able to undertake a capital reduction so to repay the inital capital to the shareholders? Are there any tax issues with doing this?

To be honest, the sole purpose is just to get the shareholders their investment back but hoping there are no tax issues?

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By Ruddles
01st Jun 2017 15:52

Are they able to undertake a capital reduction ...? Yes

Are there any tax issues ...? Yes

Will HMRC serve a counteraction notice? Who knows? You could ask them in advance, but I wouldn't bother.

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By Jigs
02nd Jun 2017 08:14

Thank you, how about if the shareholders are companies and not individuals? There is no tax benefit as a dividend would not be taxed in the companies any way?

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Replying to Jigs:
By Ruddles
02nd Jun 2017 09:31

'Corporate' capital reductions are potentially caught as well. How are chargeable gains treated in a company?

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