Intercompany Loan SPV

[ChimpMaster]

Thanks ! Is there a limit on the amount of money which can be borrow to the SPV Company ? (Obviously still keeping the Contracting Company Solvent)

No limit that I am aware of but make sure you have enough in the IT company to cover outgoings and taxes.

I made sure I was majority shareholder in both companies too.

Note that an outstanding loan can be a blocker to MVL if you plan to close the IT company. So the loan has to be paid back from the SPV, or the loan has to be written off somehow (which is tax-neutral).

Who is your accountant? I can introduce you to mine if you like - PM me - but only if you're serious.

[LoanCharged]

You could make the SPV a shareholder of your current PSC, pay a dividend to that SPV and there's no CT consequence.

You sure about this? The SPV receiving the dividend will declare the payment on P&L account as turnover (income from shares in group undertakings).

This is then open to CT. That’s my understanding anyway based on accountant advice.

[LoanCharged]

personally I'm not convinced it's the best idea

Why? Please elucidate your concerns. Have HMRC got this planning on their radar?

[eddie1507]

Sorry how can you purchase 2 or 3 hourses with 120K??

Looking at 25% Deposit on small houses, the 120k isn't a hard rule as there is a surplus there.

[Maslins]

Why? Please elucidate your concerns. Have HMRC got this planning on their radar?

Not that I'm aware of...I just don't think it's a good option. I've elaborated on my views a few times on here before, so apologies but I can't be bothered typing it all up again. I'm sure you can find via a search if you're keen.

[eddie1507]

No limit that I am aware of but make sure you have enough in the IT company to cover outgoings and taxes.

I made sure I was majority shareholder in both companies too.

Note that an outstanding loan can be a blocker to MVL if you plan to close the IT company. So the loan has to be paid back from the SPV, or the loan has to be written off somehow (which is tax-neutral).

Who is your accountant? I can introduce you to mine if you like - PM me - but only if you're serious.

Thanks for the Info!
My accountant is a local accountant who are really good for contracting accounts but not much experience with SPV's i don't think, i did give Gorilla accounting a call who was great so i'm going to look at the feasibility of running 2 separate business with different accountants.

I will look into changing the SIC code of contractor Company as the benefit is i won't create a link between Contractor CO earnings and SPV earning however not sure how the mortgage underwriters will look at the SPV previously being a consulting company as there is always an element of risk of previous clients potentially looking for warranty from previous works done.

Cheers for the advice

[ChimpMaster]

Thanks for the Info!
My accountant is a local accountant who are really good for contracting accounts but not much experience with SPV's i don't think, i did give Gorilla accounting a call who was great so i'm going to look at the feasibility of running 2 separate business with different accountants.

I will look into changing the SIC code of contractor Company as the benefit is i won't create a link between Contractor CO earnings and SPV earning however not sure how the mortgage underwriters will look at the SPV previously being a consulting company as there is always an element of risk of previous clients potentially looking for warranty from previous works done.

Cheers for the advice

Woah, be careful there. YOU need to understand what you are doing because ultimately YOU are responsible, not your accountants. My advice would be to keep to one accountant - an accountant that is good and understands the various facets of your businesses. Else you will be left to juggle the comms and numbers.

I'm not experienced / knowledgeable on changing the SIC of your IT Co to another SIC , and then starting up another company for your IT business. It doesn't sit right with me but at the same time I can't find anything wrong with it. Will be interesting to see what the others on CUK think about it.

Mortgage lenders would be the least of my worries.

[Pegasus]

Note that an outstanding loan can be a blocker to MVL if you plan to close the IT company. So the loan has to be paid back from the SPV, or the loan has to be written off somehow (which is tax-neutral).

Thanks ChimpMaster.

Once the loan has been repaid fully, do you reckon that having such intercompany loans in the past, could still cause any issues in MVL or Entrepreneur Relief, when closing the IT company?

Or once that loan has been repaid fully, then its all good and clear?

[Craig@Clarity]

Yes I'm sure about this. Ask him about Franked Investments

You sure about this? The SPV receiving the dividend will declare the payment on P&L account as turnover (income from shares in group undertakings).

This is then open to CT. That’s my understanding anyway based on accountant advice.

[ChimpMaster]

Thanks ChimpMaster.

Once the loan has been repaid fully, do you reckon that having such intercompany loans in the past, could still cause any issues in MVL or Entrepreneur Relief, when closing the IT company?

Or once that loan has been repaid fully, then its all good and clear?

No problem, so long as the loan is repaid or written off before you start the liquidation process.