Withdrawing profit from company

Options for timing withdrawing profit

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Question deleted as apparently not the appropriate place to ask.

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Portia profile image
By Portia Nina Levin
06th Oct 2017 11:19

You should discuss this with your accountant, who can properly advise on the pros and cons.

It's so much better a solution than asking a gang of useless numpties on the internet.

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Replying to Portia Nina Levin:
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By andy.partridge
06th Oct 2017 11:46

Useless numpty? Don't be so hard on yourself.

You are the right person to ask, but one or more of your personalities might be the wrong one to answer.

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By Ruddles
06th Oct 2017 11:29

bobj wrote:
Thank you for reading.

You're welcome. I enjoyed it.

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By Tim Vane
06th Oct 2017 11:59

I am sure the OP already asked his or her accountant but his or her accountant was on holiday slash ill slash busy at the moment slash unable to advise at this time and the OP is still awaiting a response and just thought it would be fun to ask a random bunch of semi-anonymous strangers. On a Friday too, so that's going to work out really well. Presumably there is something dodgy/semi-legal about the trading company or there would be no need to pull the cash out so urgently.

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Replying to Tim Vane:
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By andy.partridge
06th Oct 2017 12:09

Dodgy? Not necessarily. It might be that the holding company needs funds to meet timely creditor obligations, for example a previous owner of the trading company from whom the holding company purchased the shares.

Perhaps the OP could explain!

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By SteveHa
06th Oct 2017 12:23

Awww. What was the question?

It's no fun when you only see the answers.

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Replying to SteveHa:
By Ruddles
06th Oct 2017 12:44

Perhaps, just perhaps, the penny's beginning to drop.

FYI, though, the question was, in broad terms, about the tax implications of a trading company distributing all its profits to its parent but the parent paying dividends on only some of those profits. It should have been an easy one for the OP's accountant to handle.

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Replying to Ruddles:
By SteveHa
06th Oct 2017 13:13

Thank you. At least things make a little more sense.

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By WhichTyler
06th Oct 2017 12:38

Well that escalated quickly...

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Portia profile image
By Portia Nina Levin
06th Oct 2017 12:47

Can we forward you a link to a short "AWeb experience satisfaction" survey for completion Bob?

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By justsotax
06th Oct 2017 13:25

'apparently not appropriate place to ask'....youth of today...you have to laugh....it used to be that you would only ask these type of questions to trusted sources....now people just post them on any old website for any pleb (PNL excluded of course) to view and respond to.....

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By Tim Vane
06th Oct 2017 15:37

OK, so the question disappearing right after being challenged as to why the need to pull cash out so quickly might confirm that this was indeed a dodgy company scam and they needed to get the profits out quick before closing the company.

The original question was:

bobj wrote:

I am the only director and shareholder of my company. The set up is a trading company 100% owned by a holding company which is 100% owned by me. The holding company does not trade on its own account and just holds the shares of the trading company.

Normally the trading company would pay a dividend to the holding company which in turn pays the amount to me. This year I would like to take less taxable income but without leaving undistributed profits in the trading company. Can the trading company pay a dividend to the holding company, and the amount remain as cash in the holding company and not paid out to me?

Would this allow profit to be withdrawn from the trading company without creating a personal income tax liability?

Assuming corporation tax on all profits is paid by the trading company prior to dividend payments to the holding company, would the holding company suffer any corporation tax liability for retaining the dividend and not paying it out?

If my suggestion is not acceptable, is there an acceptable way to remove post tax profit from the trading company but defer when I receive it as personally taxable income?

Thank you for reading.

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Replying to Tim Vane:
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By andy.partridge
06th Oct 2017 15:52

Shouldn't we give him credit for not posting as 'Anonymous' or am I being too charitable?

Tell me if I am being naive, but I don't see anything dodgy here. It could be something as simple as preferring not to pay higher rate tax or lose their personal allowance. Where is the intention to close the company that you refer to?

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Replying to andy.partridge:
Stepurhan
By stepurhan
06th Oct 2017 16:18

The possible dodginess comes from the holding company.

If it was simply a matter of not wanting to pay higher rate tax or lose their personal allowance, they could just not take dividends from the trading company. What is the purpose of having the holding company instead? The only logical reason for it I can see is to put funds out of the reach of anyone taking action against the trading company.

You did also mention earlier the possibility the holding company had creditors to pay. Since the OP said that the dividend has just been paid out to them in previous years, this is presumably not the case.

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Replying to stepurhan:
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By andy.partridge
06th Oct 2017 16:44

Honestly, you lot are so cynical ;)
Time for a song . . .
https://www.youtube.com/watch?v=BSDnCsHKZ4M

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Replying to andy.partridge:
Stepurhan
By stepurhan
06th Oct 2017 16:58

https://www.youtube.com/watch?v=elWzAZR28e0

(Disclaimer : Not remotely my taste in music)

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