Ltd purchasing shares of another Ltd
Discussion
I own 100% of A Ltd.
I own 50% of B Ltd.
I have agreed to purchase the remaining 50% of B Ltd.
I was going to do this personally but it just occurred to me that A Ltd could purchase all 100% of B Ltd.
Both companies are in profit.
Both companies have the same Directors.
B Ltd does not pay dividends, remuneration is via PAYE.
Turnover of A Ltd is ten times that of B Ltd.
A Ltd is VAT registered, B Ltd is not.
Are there any adverse consequences of this?
Personally I draw £7200 PAYE from each company as no NI. Would this be affected in any way?
Does there need to be a formal valuation of B Ltd if purchased by A Ltd?
I happen to be having lunch with my accountant today so will discuss with him but thought an opinion from you guys couldn't hurt.
I own 50% of B Ltd.
I have agreed to purchase the remaining 50% of B Ltd.
I was going to do this personally but it just occurred to me that A Ltd could purchase all 100% of B Ltd.
Both companies are in profit.
Both companies have the same Directors.
B Ltd does not pay dividends, remuneration is via PAYE.
Turnover of A Ltd is ten times that of B Ltd.
A Ltd is VAT registered, B Ltd is not.
Are there any adverse consequences of this?
Personally I draw £7200 PAYE from each company as no NI. Would this be affected in any way?
Does there need to be a formal valuation of B Ltd if purchased by A Ltd?
I happen to be having lunch with my accountant today so will discuss with him but thought an opinion from you guys couldn't hurt.
Edited by PurpleMoonlight on Wednesday 18th May 04:56
Edited by PurpleMoonlight on Wednesday 18th May 05:07
I thought that the way forward was to have a holding company owning all the shares in the other companies, so profits are passed upwards and to have only one set of shares that distribute.
Also the benefits of ringfencing, for example a building.
Much of this type of stuff is done (in my own experience) to accommodate the tax rules that apply at the time, and you can end up with some very convoluted setups that were arranged for irrelevant historical situations.
Also the benefits of ringfencing, for example a building.
Much of this type of stuff is done (in my own experience) to accommodate the tax rules that apply at the time, and you can end up with some very convoluted setups that were arranged for irrelevant historical situations.
PurpleMoonlight said:
Eric Mc said:
What did the accountant say about the other matters?
He didn't say my accounts would cost me more. I just asked of there were any problems other than the three questions I specifically raised and he said no.
In my experience the overheads of running two small companies, not just in financial terms but in your time as well (do not under estimate this), far outweighs any small savings made here and there, and if you ever have an HMRC inspection they will expect to see ever expense (inc phone bills, etc) apportioned correctly to the correct company. For instance if your mobile is through the VAT registered company, you can claim the VAT back, but they will expect to see an invoice to the other company for the correct amount of calls + VAT, they will also expect to see that it has been paid and not just ';written off'/lost/etc.......
Unless there is a really good reason, I would put all your eggs in one basket, and just have one company.
Yes your accountancy bill may not change Company X bill is £XXX, and company Y bill £YYY, but one slightly larger companies bill may well be less than £XXX+£YYY
Unless there is a really good reason, I would put all your eggs in one basket, and just have one company.
Yes your accountancy bill may not change Company X bill is £XXX, and company Y bill £YYY, but one slightly larger companies bill may well be less than £XXX+£YYY
DavidY said:
In my experience the overheads of running two small companies, not just in financial terms but in your time as well (do not under estimate this), far outweighs any small savings made here and there, and if you ever have an HMRC inspection they will expect to see ever expense (inc phone bills, etc) apportioned correctly to the correct company. For instance if your mobile is through the VAT registered company, you can claim the VAT back, but they will expect to see an invoice to the other company for the correct amount of calls + VAT, they will also expect to see that it has been paid and not just ';written off'/lost/etc.......
Unless there is a really good reason, I would put all your eggs in one basket, and just have one company.
Yes your accountancy bill may not change Company X bill is £XXX, and company Y bill £YYY, but one slightly larger companies bill may well be less than £XXX+£YYY
100% my experience too.Unless there is a really good reason, I would put all your eggs in one basket, and just have one company.
Yes your accountancy bill may not change Company X bill is £XXX, and company Y bill £YYY, but one slightly larger companies bill may well be less than £XXX+£YYY
PurpleMoonlight said:
That would then mean VAT on B's fees which it doesn't have to charge at the moment.
PurpleMoonlight said:
B uses A's office and equipment but A does not charge for that.
So you are claiming all the VAT back on office expenses in company A, for which company B has benefit of, and that company B does not charge VAT on it's invoices.I think you should have a strong word with yourself regarding the rights and wrongs of misrepresentation
It sounds like you are having your cake and eating it, hey Mr Customer are you VAT registered, oh yes then I'll invoice you through company A, oh you're not don't worry if I invoice you through company B then you won't get charged VAT, but that's ok as I'm claiming back all the VAT expenses incurred through my other company.
I might have got the wrong end of the stick here, but you certainly haven't explained things very clearly (or have you)
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