We have a small company with 70 shareholders. If we sell our only asset (a
property) but wish to retain the company, or a clone of it, with the current
shareholders having been paid a proportion (nearly all) of their share
value, what's the best way of going about this? Our accountant says we need
to involve a liquidator, but this seems excessive. If the share value is say
£1,000 and we pay shareholders say £900 and they retain the shares, is
there a tax problem with this? Or should we buy up all the shares and issue
new ones in a new company?

Rob Graham

On 28 Apr, 14:15, "Rob graham"  wrote:
> We have a small company with 70 shareholders. If we sell our only asset (a> property) but wish to retain the company, or a clone of it, with the current
> shareholders having been paid a proportion (nearly all) of their share
> value, what's the best way of going about this? Our accountant says we need
> to involve a liquidator, but this seems excessive. If the share value is say
> £1,000 and we pay shareholders say £900 and they retain the shares, is> there a tax problem with this? Or should we buy up all the shares and issue
> new ones in a new company?
>
> Rob Graham

You may not need a liquidator. There's many issues to consider. You
haven't given much detail at all. If there's 70 shareholders I would
hope the company has an accountant who should know more about what
issues are relevant in this particular case. Why do you want to retain
the company?

"PeterSaxton"  wrote in message 
news:05992793-bd3e-48e9-9123-8a64a48d0452@y38g2000hsy.googlegroups.com...
On 28 Apr, 14:15, "Rob graham"  wrote:
> We have a small company with 70 shareholders. If we sell our only asset (a
> property) but wish to retain the company, or a clone of it, with the 
> current
> shareholders having been paid a proportion (nearly all) of their share
> value, what's the best way of going about this? Our accountant says we 
> need
> to involve a liquidator, but this seems excessive. If the share value is 
> say
> £1,000 and we pay shareholders say £900 and they retain the shares, is
> there a tax problem with this? Or should we buy up all the shares and 
> issue
> new ones in a new company?
>
> Rob Graham

You may not need a liquidator. There's many issues to consider. You
haven't given much detail at all. If there's 70 shareholders I would
hope the company has an accountant who should know more about what
issues are relevant in this particular case. Why do you want to retain
the company?

We are hoping to have a clawback clause to prevent the new purchaser 
developing the site. If he does, then shareholders get the price difference. 
This is seen as a deterrent to a developer. But the company - or an 
equivalent body  - would need to be in existence to administrate the 
clawback.

On 28 Apr, 21:56, "Rob graham"  wrote:
> "PeterSaxton"  wrote in message
>
> news:05992793-bd3e-48e9-9123-8a64a48d0452@y38g2000hsy.googlegroups.com...
> On 28 Apr, 14:15, "Rob graham"  wrote:
>
> > We have a small company with 70 shareholders. If we sell our only asset (a
> > property) but wish to retain the company, or a clone of it, with the
> > current
> > shareholders having been paid a proportion (nearly all) of their share
> > value, what's the best way of going about this? Our accountant says we
> > need
> > to involve a liquidator, but this seems excessive. If the share value is> > say
> > £1,000 and we pay shareholders say £900 and they retain the shares, is
> > there a tax problem with this? Or should we buy up all the shares and
> > issue
> > new ones in a new company?
>
> > Rob Graham
>
> You may not need a liquidator. There's many issues to consider. You
> haven't given much detail at all. If there's 70 shareholders I would
> hope the company has an accountant who should know more about what
> issues are relevant in this particular case. Why do you want to retain
> the company?
>
> We are hoping to have a clawback clause to prevent the new purchaser
> developing the site. If he does, then shareholders get the price difference.
> This is seen as a deterrent to a developer. But the company - or an
> equivalent body  - would need to be in existence to administrate the
> clawback.

There's still a lot of possible scenarios so it's best to get
professional advice. Tax is a big issue but given the potential
amounts involved I would go to an accountant that can review all the
issues.

In article , Rob graham 
 writes
>We have a small company with 70 shareholders. If we sell our only asset (a
>property) but wish to retain the company, or a clone of it, with the current
>shareholders having been paid a proportion (nearly all) of their share
>value, what's the best way of going about this? Our accountant says we need
>to involve a liquidator, but this seems excessive. If the share value is say
>£1,000 and we pay shareholders say £900 and they retain the shares, is
>there a tax problem with this? Or should we buy up all the shares and issue
>new ones in a new company?
>
>Rob Graham
>
>

This is a bit light on detail, so can't give any definitive advice.

I suspect that the issue here may be that the shareholders want capital 
treatment for their gains, rather than income treatment.

This being the case it may be easier to achieve capital treatment if the 
company was put into a formal liquidation rather then go for an informal 
652 winding up following the ESC C16 route as this might be a bit tricky 
satisfying ESC C16 if there are 70 shareholders and the company is going 
to be kept going for the time being.

I would suspect that a liquidator would charge 3K minimum.

If capital treatment is not required  then from the information given I 
cannot see a problem an informal 652 winding up, or even keep the 
company going and just pay the £900 out as a dividend in the normal way.

-- 
Jon Griffey FCCA CTA
Hackett Griffey
Chartered Certified Accountants & Registered Auditors
2 Mill Road, Haverhill, Suffolk, CB9 8BD

Tel (01440) 762024

www.hackettgriffey.com

See www.hackettgriffey.com/pages/legal.html for disclaimers

On 29 Apr, 17:31, Jon Griffey  wrote:
> In article , Rob graham
>  writes
>
> >We have a small company with 70 shareholders. If we sell our only asset (a
> >property) but wish to retain the company, or a clone of it, with the current
> >shareholders having been paid a proportion (nearly all) of their share
> >value, what's the best way of going about this? Our accountant says we need
> >to involve a liquidator, but this seems excessive. If the share value is say
> >£1,000 and we pay shareholders say £900 and they retain the shares, is
> >there a tax problem with this? Or should we buy up all the shares and issue
> >new ones in a new company?
>
> >Rob Graham
>
> This is a bit light on detail, so can't give any definitive advice.
>
> I suspect that the issue here may be that the shareholders want capital
> treatment for their gains, rather than income treatment.
>
> This being the case it may be easier to achieve capital treatment if the
> company was put into a formal liquidation rather then go for an informal
> 652 winding up following the ESC C16 route as this might be a bit tricky
> satisfying ESC C16 if there are 70 shareholders and the company is going
> to be kept going for the time being.
>
> I would suspect that a liquidator would charge 3K minimum.
>
> If capital treatment is not required  then from the information given I
> cannot see a problem an informal 652 winding up, or even keep the
> company going and just pay the £900 out as a dividend in the normal way.They seem to want to retain the company so would it be worthwhile
discussing the circumstances with HMRC to see if they can treat it as
a capital distribution? Even if it ends up that the distribution is
treated as income it is unlikely to be onerous.

"Rob graham"  wrote in message 
news:Xs-dndFDOcdzUIjVnZ2dnUVZ8smgnZ2d@bt.com...
> We have a small company with 70 shareholders. If we sell our only asset (a
> property) but wish to retain the company, or a clone of it, with the 
> current
> shareholders having been paid a proportion (nearly all) of their share
> value, what's the best way of going about this? Our accountant says we 
> need
> to involve a liquidator, but this seems excessive. If the share value is 
> say
> £1,000 and we pay shareholders say £900 and they retain the shares, is
> there a tax problem with this? Or should we buy up all the shares and 
> issue
> new ones in a new company?
>
> Rob Graham
>
>

Thanks for your help. I was deliberately light on detail because I would 
need to write a treatise to be fully explanatory! However, I was unhappy 
with the direction our accountants seemed to be taking us and I wanted 
another opinion. But there have been more developments since, so I may get 
back to you.

Thanks to date

Rob

In article 
, 
PeterSaxton  writes
>On 29 Apr, 17:31, Jon Griffey  wrote:
>> In article , Rob graham
>>  writes
>>
>> >We have a small company with 70 shareholders. If we sell our only asset (a
>> >property) but wish to retain the company, or a clone of it, with the current
>> >shareholders having been paid a proportion (nearly all) of their share
>> >value, what's the best way of going about this? Our accountant says we need
>> >to involve a liquidator, but this seems excessive. If the share value is say
>> >£1,000 and we pay shareholders say £900 and they retain the shares, is
>> >there a tax problem with this? Or should we buy up all the shares and issue
>> >new ones in a new company?
>>
>> >Rob Graham
>>
>> This is a bit light on detail, so can't give any definitive advice.
>>
>> I suspect that the issue here may be that the shareholders want capital
>> treatment for their gains, rather than income treatment.
>>
>> This being the case it may be easier to achieve capital treatment if the
>> company was put into a formal liquidation rather then go for an informal
>> 652 winding up following the ESC C16 route as this might be a bit tricky
>> satisfying ESC C16 if there are 70 shareholders and the company is going
>> to be kept going for the time being.
>>
>> I would suspect that a liquidator would charge 3K minimum.
>>
>> If capital treatment is not required  then from the information given I
>> cannot see a problem an informal 652 winding up, or even keep the
>> company going and just pay the £900 out as a dividend in the normal way.
>>
>They seem to want to retain the company so would it be worthwhile
>discussing the circumstances with HMRC to see if they can treat it as
>a capital distribution? Even if it ends up that the distribution is
>treated as income it is unlikely to be onerous.
>

Fair points.

I see the problem being that the company will not be dissolved in a 
reasonable time scale, something that HMRC usually like to see when 
granting ESC C16 and so there may be a danger of ESC C16 being 
withdrawn.

Perhaps the OP can enlighten us with the further developments...


-- 
Jon Griffey FCCA CTA
Hackett Griffey
Chartered Certified Accountants & Registered Auditors
2 Mill Road, Haverhill, Suffolk, CB9 8BD

Tel (01440) 762024

www.hackettgriffey.com

See www.hackettgriffey.com/pages/legal.html for disclaimers