• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Rearranging shareholdings

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Rearranging shareholdings

    Tom and Dick have 70 and 30 of 100 shares respectively. They want to get Harry on board and rearrange things so that Tom has 55%, Dick has 25% and Harry has 20%. How can this be achieved?

    They can't just issue Harry with 25 new shares (giving him 25/125 = 20% of the business) because this would leave Tom with 56% and Dick with 24%. Would new shares have to be issued to all three of them in order to get the percentages exactly as required, and if so would Tom and Dick have to pay tax on these even though their stake in percentage terms was decreasing?

    #2
    Originally posted by ittony View Post
    Tom and Dick have 70 and 30 of 100 shares respectively. They want to get Harry on board and rearrange things so that Tom has 55%, Dick has 25% and Harry has 20%. How can this be achieved?

    They can't just issue Harry with 25 new shares (giving him 25/125 = 20% of the business) because this would leave Tom with 56% and Dick with 24%. Would new shares have to be issued to all three of them in order to get the percentages exactly as required, and if so would Tom and Dick have to pay tax on these even though their stake in percentage terms was decreasing?
    Why don't Tom & Dick sell the relevant number of shares to Harry?
    Harry buys 15 off Tom and 5 off Dick.

    Share transfers from one person to another
    …Maybe we ain’t that young anymore

    Comment


      #3
      Sounds like the best way to achieve this is to speak to your accountant and let them handle it.

      It's pretty straightforward but it's not something you want to be doing too often else you may attract attention from HMRC. They will assume you are doing it to artificially fudge your tax situation in your favour.

      If you really are doing it for business reasons you'll be OK.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by WTFH View Post
        Why don't Tom & Dick sell the relevant number of shares to Harry?
        Could do, but everything I read about Employment Related Securities assumes the shares will be issued by the company. Harry would be doing some work for the company in return for his shares and the agreement would be that some or all of his shares would be returned if the work was not completed.

        I can't get my head around how all this would work for tax purposes if the shares were being transferred directly between individuals. If Tom gives Harry 15 shares, Tom personally has to pay CGT on the full market value, but the benefit of Harry's work is going to the company. Then, if the work is only half completed and Harry must return half his shares, does that somehow affect Harry's original CGT payment?

        Comment


          #5
          And the above will probably look like an artifical method to pay the guy using a method to reduce tax liabilities which is what HMRC will be looking for.

          Why not just pay him normally with a bonus for completion? Giving part ownership in the business for a short piece of work doesn't sound like the best method.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            Originally posted by ittony View Post
            Could do, but everything I read about Employment Related Securities assumes the shares will be issued by the company. Harry would be doing some work for the company in return for his shares and the agreement would be that some or all of his shares would be returned if the work was not completed.

            I can't get my head around how all this would work for tax purposes if the shares were being transferred directly between individuals. If Tom gives Harry 15 shares, Tom personally has to pay CGT on the full market value, but the benefit of Harry's work is going to the company. Then, if the work is only half completed and Harry must return half his shares, does that somehow affect Harry's original CGT payment?
            if this is employment related then you really need some proper legal advice.
            You'll need contracts and share agreements.
            You'll also need to do it right or else you'll screw up any potential ER tax breaks in the future.
            See You Next Tuesday

            Comment


              #7
              Originally posted by northernladuk View Post
              Sounds like the best way to achieve this is to speak to your accountant and let them handle it.
              Can you recommend one? I'm Harry in this scenario and I don't have an accountant. I'd have to fund this enquiry myself at this speculative stage. Do accountants sell specific answers to specific questions without being your accountant?

              Comment


                #8
                Originally posted by ittony View Post
                Can you recommend one? I'm Harry in this scenario and I don't have an accountant. I'd have to fund this enquiry myself at this speculative stage. Do accountants sell specific answers to specific questions without being your accountant?
                read this Harry.... Jam tomorrow - Wikipedia
                See You Next Tuesday

                Comment


                  #9
                  Originally posted by Lance View Post
                  read this Harry.... Jam tomorrow - Wikipedia
                  I'd be offering Jam Today in return for my questions answered. Do all accountants work only on a Jam Indefinitely basis?

                  Comment


                    #10
                    Does the company have any retained funds? If not, why would it be worth anything?

                    Comment

                    Working...
                    X