Andrew Marr (Forbes Dawson) answers a query on the tax treatment of a capital reduction on a share for share exchange.
Question
A UK resident individual owns 100% of the share capital in a UK holding company which in turn owns 100% of a UK trading company. This structure arose five years ago after a share for share exchange which was carried out for genuine commercial reasons (with little thought for tax). The trading company was valued at £600 000 at that time and 600 000 £1 shares were issued by the holding company. The individual recently reduced the capital of the holding company by one third thus receiving £200 000. The funds for this reduction arose from reserves in the trading subsidiary which were paid up to the holding company as a distribution. What is the tax treatment of the...
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Andrew Marr (Forbes Dawson) answers a query on the tax treatment of a capital reduction on a share for share exchange.
Question
A UK resident individual owns 100% of the share capital in a UK holding company which in turn owns 100% of a UK trading company. This structure arose five years ago after a share for share exchange which was carried out for genuine commercial reasons (with little thought for tax). The trading company was valued at £600 000 at that time and 600 000 £1 shares were issued by the holding company. The individual recently reduced the capital of the holding company by one third thus receiving £200 000. The funds for this reduction arose from reserves in the trading subsidiary which were paid up to the holding company as a distribution. What is the tax treatment of the...
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If you do not subscribe but are a registered user, please enter your details in the following boxes:
