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share premium account-capital reduction or divs

share premium account-capital reduction or dividends

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Small share premium account of £6k which i would like to transfer to 2 basic rate directors/shareholders' tax payers.

Do I  complete this as dividends as distributable reserves or share reduction?

What are the accounting entries?

CH procedue-solvency statement and special resolution and do these have to be lodged at CH?

CT/IT ramifications?

if anybody out there wants to do the work what would be their fees including VAT?  Thank you.

 

Thank you.

Replies (14)

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By JDBENJAMIN
03rd Dec 2019 15:12

If you are a practitioner, you should be able to address this question yourself. There is no way we can advise without knowing the full circumstances of the company and its shareholders.

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Replying to JDBENJAMIN:
Psycho
By Wilson Philips
03rd Dec 2019 15:32

Jeez - someone got out of bed on the wrong side this morning. Capital reductions do not occur every day in a small practice (we're a decent-sized office and have done only a handful in the last few years). The OP does appear to understand his limitations, offering the work to someone perhaps more experienced in the area.

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Replying to Wilson Philips:
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By Tax Dragon
03rd Dec 2019 16:11

TBH JD comes across as someone whose bed only has wrong sides.

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Replying to Wilson Philips:
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By davidbarry
04th Dec 2019 10:49

thank you

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By ireallyshouldknowthisbut
03rd Dec 2019 15:14

You can't declare a dividend out of non-distributable reserves.

You may be able to reduce the capital, but its a "are you really sure for £6k?"

The "why on earth are you doing this?" would be my first point of call.

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By johngroganjga
03rd Dec 2019 16:05

Has the company already distributed all its profits and now wants to distribute more?

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Replying to johngroganjga:
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By davidbarry
04th Dec 2019 10:50

No it has not. I am just not happy with a share premium account in the b/s and would like it removed-best way

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Replying to davidbarry:
By johngroganjga
04th Dec 2019 12:25

Then there is no point in it is there? If you really have a pathological aversion to share premiums convert it to shares - much easier and cheaper.

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Replying to johngroganjga:
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By davidbarry
04th Dec 2019 12:48

thank you John. I will have to research the procedure . it is the conclusion I also came to.
It is a capital reduction procedure I think.
Good to see you back on the blog. You have been missed.

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By johnt27
03rd Dec 2019 18:35

Not sure this is entirely worth it for £6k. Fees could be anywhere between a few hundred £'s to £6k +

You've got a number of issues to sort:
1. Mem and Arts - can you do cap reduction? CA2006 probably, CA85 possibly
2. Shareholders agreement - any restrictions?
3. Is the company solvent and do directors understand implications of solvency statement?
4. Can you confidently prepare the paperwork properly and file?
5. FRS 102/105 - you may need to include a SOCIE in filed accounts - is your client happy to do so?
6. You can't backdate the paperwork so does this work for IT of directors now?

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Replying to johnt27:
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By davidbarry
04th Dec 2019 10:54

With research I am sure that I can. However, would you mind explaining to me what 'SOCIE' means please. Thank you.

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Replying to davidbarry:
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By davidbarry
04th Dec 2019 10:54

Sorry, I have just seen below.

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Replying to johnt27:
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By davidbarry
04th Dec 2019 12:50

Looking at a couple of websites the CH sequence seems unduly complicated for such a small amount.
Would you mind setting this out or give me an indication of fees. Thnk you.

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By nick farrow
03rd Dec 2019 18:42

SOCIE - statement of changes in equity

thanks google!

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