Opening a new company, is it legal and how much should it cost for me

[BlackenedBiker]

Hi there,

I have been discussing with my accountant about the most tax efficient way of getting money out of the business.

His advice was to open a new company and close down my current company.

I would make my wife an 33% shareholder of the new company and pay her 33% of the dividend, taking advantage of her low rate tax allowance.

The idea of closing the current company and opening a new company was that it would not raise any flags with regards to S660.

Further I would then be able to change the name of the business to my old company name to avoid the need for a new website or business stationary etc.

I would like the forums opinion on the advice my accountant has given, in terms of legality/efficacy.

Also if I can get some opinion on what will need to be done to achieve this (new bank accounts, company docs etc.) and the costs I can expect in doing this (what should expect to pay the accountant in terms of closing the business etc......

[Olly]

dooooooooooodgy

[Maslins]

Further I would then be able to change the name of the business to my old company name to avoid the need for a new website or business stationary etc.

It'll still have a different registered company number, which I think should be on your stationery.

Agree with Olly, this idea simply smells really bad, though on the surface of it I don't think it is illegal. Bear in mind by changing the company name to be the same as the old one you're effectively waving a big red flag to HMRC saying "This company is essentially the same as the old one", which may attract their attention.

If you're going to do something like that, I'd do it under a new name, and (if challenged) try to find some commercial way of justifying the new business structure. Perhaps you're targetting a new market and the old name wasn't appropriate or something.

[BlackenedBiker]

It'll still have a different registered company number, which I think should be on your stationery.

Agree with Olly, this idea simply smells really bad, though on the surface of it I don't think it is illegal. Bear in mind by changing the company name to be the same as the old one you're effectively waving a big red flag to HMRC saying "This company is essentially the same as the old one", which may attract their attention.

If you're going to do something like that, I'd do it under a new name, and (if challenged) try to find some commercial way of justifying the new business structure. Perhaps you're targetting a new market and the old name wasn't appropriate or something.

Thanks Maslins, what about just give my wife 33% of my current company and paying her 33% of the divis. How would that be in terms of HMRC view of it????

[ASB]

Thanks Maslins, what about just give my wife 33% of my current company and paying her 33% of the divis. How would that be in terms of HMRC view of it????

In terms of legality no problems. In terms of S660 possibly. However the changes mooted are currently shelved, I would suggest you read S660 carefully and make up your own mind.

Confirm that CGT will not apply (there is no reason why it should) and that stamp duty will not apply. Ensure that the transfer is properly recorded in the register of members and the stamp duty form is sent off.

[ratewhore]

Dunno if you're wanting your accountant to do it for you but I paid around 40 notes to form a Ltd using quickformations.

http://www.quickformations.com