Tax liquidation

Tax liquidation

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Having a UK Hold Co with a UK Subs. We want to potentially sell the UK sub to a 3rd party. 

The rationale is that if Holdco sold one of its subsidiaries that the basis in the shares would used to determine any tax gain in a share sale to a third party? 

What about in a liquidation or insolvency?

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By Wanderer
09th Dec 2020 13:38

Member Since: 4th Dec 2020
accountingdude

accountingdude wrote:
Tax liquidation

Having a UK Hold Co with a UK Subs. We want to potentially sell the UK sub to a 3rd party. 

The rationale is that if Holdco sold one of its subsidiaries that the basis in the shares would used to determine any tax gain in a share sale to a third party? 

What about in a liquidation or insolvency?

SSE?
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Replying to Wanderer:
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By accountingdude
09th Dec 2020 14:02

SSE applies for a sale to a third party?

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Replying to accountingdude:
By Duggimon
09th Dec 2020 14:06

Yes

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By Duggimon
09th Dec 2020 14:04

I don't actually know what the question is. The answer might be that a company won't pay tax on a share sale of a subsidiary to a third party. But I suppose the answer may be something else entirely once I find out what the question is.

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Replying to Duggimon:
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By accountingdude
09th Dec 2020 14:24

I am fine with SEE on external sales of shares.

I need also to analyse the tax consequences of liquidating a sub. Is it correct that any proceeds from a liquidation can be distributed to HoldCo as a dividend. Dividends are exempt between UK group companies?

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By accountingdude
09th Dec 2020 14:25

Also would there be any difference to SSE if Sub1 (which is sold to a third party ) is based in Netherlands. Would SSE still apply?

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
10th Dec 2020 11:01

Yes a solvent liquidation of a subsidiary can be passed up tax free. Inter group transfers are tax free.

However why liquidate it? The Company could just sell everything and be left with a just bank balance. Dividend it up (no tax) then DS01 strike off.

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