Liquidating a private company and asset transfers

[Walkeia]

Hi everyone,

I was wondering if anyone with accountancy experience / knowledge would be able to help me with the following.

I own a private limited company set up which owns a property and has a portfolio of shares in a brokerage account. I’m currently selling the property. Thereafter I’d like to liquidate the company and pay back the directors loans / tax on any profit.

Is it possible to transfer the share portfolio in specie to my personal brokerage account as payment instead of liquidating into cash… using closing day prices for the transfer and accounting marks.

I will also be getting professional advice before doing anything but from googling this question have not found much information relating to this.

Many thanks,

Ian

[moorfield]

Hi everyone,

I was wondering if anyone with accountancy experience / knowledge would be able to help me with the following.

I own a private limited company set up which owns a property and has a portfolio of shares in a brokerage account. I’m currently selling the property. Thereafter I’d like to liquidate the company and pay back the directors loans / tax on any profit.

Is it possible to transfer the share portfolio in specie to my personal brokerage account as payment instead of liquidating into cash… using closing day prices for the transfer and accounting marks.

I will also be getting professional advice before doing anything but from googling this question have not found much information relating to this.

Many thanks,

Ian

No idea. But I think you will also need to seek advice on whether there is any capital gains tax liability to the company on the value of those shares before they are transferred out, in specie or not. If there is you'll need to find the funds from elsewhere for the company to pay, or sell some of them first. And once they are transferred out there may also be an income tax liability on yourself. Sounds messy!

[Walkeia]

Indeed it is not ideal at all! Appreciate the response

There will be tax payable on the profit in the company; then cap gains, dividend or income tax liable on the payout to myself above the monies loaned to the company.

The obvious way - sell the holdings and repurchase; could lead to significant market slippage and I am worried somewhat on bid-offer costs - especially on some of the investment trust holdings.

[Walkeia]

An alternative could be to login to both accounts and on the less liquid holdings - cross them via the exchange. Is this allowed as a process to change entities holding the assets. I’d pay stamp and dealing charges but that is fine.

[eisman]

It used to be possible to undertake an 'informal' liquidation in the manner proposed by the OP, using an HMRC Extra-Statutory Concession (ESC C16), whilst still qualifying for treatment as a capital distribution.

However, this is no longer possible if the company's assets amount to more than £25,000. For background:
https://www.accountingweb.co.uk/busines ... to-ps25000

and the HMRC Manual outlining the terms of the replacement statutory legislation:
https://www.gov.uk/hmrc-internal-manual ... l/ctm36220

If the assets of the OP's company exceed £25K, he would need to instruct an Insolvency Practitioner to formally liquidate the company, with the associated professional costs that would entail. As an indication, the last such case I was involved in (as a tax adviser) prior to my retirement four years ago, the fee for the simplest of liquidations - a company that was then only a cash shell - started at £5,000 - £7,500 plus VAT.

In order to avoid the professional fees of a formal liquidation, it may be possible first to declare income dividends (which can be in specie distributions) to reduce the company's assets below £25K (after payment of any corporation tax liability on any chargeable gains on disposal of the property and the share portfolio. However, such income distributions would trigger liabilities to income tax for the shareholder.

Distribution of the remaining £24.9K might then qualify for capital treatment.

Eisman

[Fluke]

Hi everyone,

I was wondering if anyone with accountancy experience / knowledge would be able to help me with the following.

I own a private limited company set up which owns a property and has a portfolio of shares in a brokerage account. I’m currently selling the property. Thereafter I’d like to liquidate the company and pay back the directors loans / tax on any profit.

Is it possible to transfer the share portfolio in specie to my personal brokerage account as payment instead of liquidating into cash… using closing day prices for the transfer and accounting marks.

I will also be getting professional advice before doing anything but from googling this question have not found much information relating to this.

Many thanks,

Ian

I closed a a ltd company a couple of years ago which owned some shares in a fund, I contacted the fund manager and asked if it could be transferred in specie to my own personal account which I also held with them. It was a simple matter of filling in a form and they did the rest. I realise that a portfolio of shares is a bit different but it might be worth a call to your brokerage firm to see what options there might be.

[Walkeia]

Hi Eisman and Fluke,

Thank you for your responses; this has given me hope that an in specie transfer could be possible once the director of the company has sold all the assets into cash or shares. We could then take professional advise, hire a professional firm to manage the liquidation should this be required.

Much appreciated