Some good corporate reorganisation books by Pete Miler and Richard Bramwell which can help but would warn against doing this type of work if you don't usually - lots of tax traps which could arise.
Just a pure theoritcal question here - if reserves are near nil, then is a £500k valuation defensible for a 20% holding? One further risk would be a potential ERS charge if a transaction happens at over market value
Whether TIS applies would, as you have rightly pointed out, depend upon the reserves available but I doubt HMRC would give clearance on the point, given the lack of commercial rationale (unless of course there is one which you haven't included here).
Even if HMRC don't grant clearance, it doesn't mean that TIS would apply as that depends on the reserves piece (amongst other things). Philip Ridgway has an excellent course on TIS matters through MBL seminars.
Being honest, I didnt find the CTA massively helped with those aspects, what it did teach me was how to read and use the legislation. Courses/books/articles from Pete Miller and Philip Ridgway have been the most useful sources for me alongside exposure to transactions in practice
The decision in J and N Potter v HMRC is interesting, whilst the case primarily focused on the trading status of the company, from recollection the company also acquired investment bonds (so clearly more than just a savings account), BADR was held to be available.
I'd use a trust to park the growth shares now so you dont need to worry about the CGT implications of gifting the shares later down the line, ensuring trust deed precludes them from benefitting until they are 18. Potentially a trust for each childs future family.
Its not quite as tax efficient due to the 10 year charges, but commercially it can offer more protection for the family wealth (e.g. risk of divorce etc.) than your children holding them outright.
From my experience dividend only shares can be a bit of a [***] to value as well, when considering the potential CGT on the gift. I'd use growth shares with divi rights personally.
Having worked in audit/accounts and more recently in a tax advisory role, I can say beyond doubt that I received more thanks for the work I did in my first year of tax compared with 3 years of audit.
I have always felt that with tax I can create an actual benefit for my client, have more contact with clients (actually get to know them), and become their number one go to person for anything business/tax related - even if I don't know the answer I can connect them with someone that does.
With audit, it always felt to me that we go through a huge amount of stress to tell clients that their numbers are pretty much OK (i.e. not materially misstated) - never really saw the value add.
My answers
If you are bringing companies under a single ultimate holding company there should be no share premium, rather merger relief will likely apply.
In your position, I would also review s77A.
Have you applied for clearance in respect of these transactions?
Some good corporate reorganisation books by Pete Miler and Richard Bramwell which can help but would warn against doing this type of work if you don't usually - lots of tax traps which could arise.
Depends what standard of firm you want, I work in the mid-market in Leeds and my go to firms are:
- Gordons LLP
- Clarion
Just a pure theoritcal question here - if reserves are near nil, then is a £500k valuation defensible for a 20% holding? One further risk would be a potential ERS charge if a transaction happens at over market value
Whether TIS applies would, as you have rightly pointed out, depend upon the reserves available but I doubt HMRC would give clearance on the point, given the lack of commercial rationale (unless of course there is one which you haven't included here).
Even if HMRC don't grant clearance, it doesn't mean that TIS would apply as that depends on the reserves piece (amongst other things). Philip Ridgway has an excellent course on TIS matters through MBL seminars.
To be fair I did the joint ACA-CTA pathway so only actually did the OMB and Individuals papers, perhaps the TOMC may cover it.
We touched on certain elements, but I didnt feel like I gained a deep understanding. Good luck with the exams, they were tough!
Being honest, I didnt find the CTA massively helped with those aspects, what it did teach me was how to read and use the legislation. Courses/books/articles from Pete Miller and Philip Ridgway have been the most useful sources for me alongside exposure to transactions in practice
The decision in J and N Potter v HMRC is interesting, whilst the case primarily focused on the trading status of the company, from recollection the company also acquired investment bonds (so clearly more than just a savings account), BADR was held to be available.
I'd use a trust to park the growth shares now so you dont need to worry about the CGT implications of gifting the shares later down the line, ensuring trust deed precludes them from benefitting until they are 18. Potentially a trust for each childs future family.
Its not quite as tax efficient due to the 10 year charges, but commercially it can offer more protection for the family wealth (e.g. risk of divorce etc.) than your children holding them outright.
From my experience dividend only shares can be a bit of a [***] to value as well, when considering the potential CGT on the gift. I'd use growth shares with divi rights personally.
I would agree wholeheartedly with your post.
Having worked in audit/accounts and more recently in a tax advisory role, I can say beyond doubt that I received more thanks for the work I did in my first year of tax compared with 3 years of audit.
I have always felt that with tax I can create an actual benefit for my client, have more contact with clients (actually get to know them), and become their number one go to person for anything business/tax related - even if I don't know the answer I can connect them with someone that does.
With audit, it always felt to me that we go through a huge amount of stress to tell clients that their numbers are pretty much OK (i.e. not materially misstated) - never really saw the value add.