A client is looking to restructure ownership between their current 4 shareholder / directors, currently at 25% each. It will end up with A: 35%, B:35%, C:15%, D:15%. The reason for the change in ownership is to reflect their work and involvement in the company in the past and in the future, hence, I believe, an ERS issue.
The company hasn't raised any investment, and so far is loss-making, as they're doing a lot of early-stage R&D. They're before the point where the R&D can be commercialised. They have a small amount of revenue, but this is to do 'outsourced R&D', not for having commercialised their product.
On the other hand, they are talking to potential investors about an investment into the company, which would value the company at around £1m.
What are people's experience on HMRC's view on the valuation for ERS purposes in situations such as this? I would suggest a valuation of zero for ERS, following any of the normal valuation approaches. However, does the fact that a potential investor is being talked to impact this, in HMRC's eyes?
Thanks a lot,