Limited company valuation to buy shares off of partner

[chilliwilly77]

Last year I have gifted 26 shares to my partner at £1 a share. We wish to transfer ownership of 11 of those shares back to me. My accountants say, that even if these are gifted, we would need to have the company valued to work out applicable capital gains on those shares. I understand the law with respect to capital gains, however I am very confused as to how I go about valuing the company.

How do I value my company?
Do I definitely need to do this?
Are there services that can help me do this?
What documentation / reports do I need to generate and maintain for audit purposes?

Example (not real life figures obviously)
I am the sole director / employee of the company.
The company is an IT contracting business, where I contract software services at a day rate.
I currently have 6 months left on a 12 month contract with no future work in the pipeline.
For argument sake, let's say there is £40,000 made on the contract, and £40,000 left. Last years profit was £90,000, turnover was £105,000, and dividends of around £45,000 were drawn.

I am a bit stuck with this!

[Lance]

as a contractor, your company is worth the assets.

That's cash in the bank
-minus expenses
-minus tax owed
+outstanding invoices
-outstanding bills
+value of any capital assets

As long as the shareholders agree that's a fair valuation then it's fair.
The only time you need a 'proper' valuation is if someone (e.g. HMRC, or creditors if you went bust) could come along and claim you valued it fraudulently. It's not really relevant for a PSC as they're worth next to sod all after the cash in the bank.

IMO you don't need to do any more that that simple calculation unless there's something fishy going on.

[northernladuk]

Why do you want to do this?

Your partner = wife yes?

[craigy1874]

Can't your accountant advise on a valuation? They should be able to!

I agree with the above though, you are looking at net asset values. I don't believe there can be any goodwill in a PSC.

But you shouldn't be left to do this on your own, that is what your accountant is there for!

[Scruff]

Last year I have gifted 26 shares to my partner at £1 a share. We wish to transfer ownership of 11 of those shares back to me. My accountants say, that even if these are gifted, we would need to have the company valued to work out applicable capital gains on those shares. I understand the law with respect to capital gains, however I am very confused as to how I go about valuing the company.

How do I value my company?
Do I definitely need to do this?
Are there services that can help me do this?
What documentation / reports do I need to generate and maintain for audit purposes?

Example (not real life figures obviously)
I am the sole director / employee of the company.
The company is an IT contracting business, where I contract software services at a day rate.
I currently have 6 months left on a 12 month contract with no future work in the pipeline.
For argument sake, let's say there is £40,000 made on the contract, and £40,000 left. Last years profit was £90,000, turnover was £105,000, and dividends of around £45,000 were drawn.

I am a bit stuck with this!

Look at the last value on your Balance Sheet which usually has "double underlines". That is the net asset value of your Company. Tell your accountant to use that, less the issued Share Capital. Divided this amount by the number of shares, in issue = net value, per share. Multiply by 11 = Value of Shares.

The alternative is to issue additional new shares to yourself to dilute your partner's shareholding to the ratio that you want.

Get a new accountant if he isn't able to come up with a 5 minute solution.

[Dom at Fox Bartfield]

Valuation

Can't your accountant advise on a valuation? They should be able to!

I agree with the above though, you are looking at net asset values. I don't believe there can be any goodwill in a PSC.

But you shouldn't be left to do this on your own, that is what your accountant is there for!

Pretty much agree with this, should be a simple exercise to carry out a desktop valuation.

Was the initial transfer to your partner carried out before trading when the company value was Nil.

[pr1]

Why do you want to do this?

Your partner = wife yes?

if she/he is paying market valuation for the shares it's irrelevant

[gables]

Give your partner 11 quid for them.

[northernladuk]

Give your partner 11 quid for them.

Or she just could just gift them back.

[northernladuk]

if she/he is paying market valuation for the shares it's irrelevant

It is but just checking he gifted them to a spouse.