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Where Taxpayers and Advisers Meet

Tax on transfer of asset between associated companies

MGambold
Posts:1
Joined:Tue Jul 07, 2015 11:04 am
Tax on transfer of asset between associated companies

Postby MGambold » Tue Jul 07, 2015 11:08 am

If two UK resident companies are under common ownership and one wants to sell it's trade to the other would it have to sell that trade at market value (in the same way that related individuals would have to) or would this be covered by the transfer pricing exemption for small companies?

The specific situation is that one company has two trades. They're seeking an SEIS investment in the newer trade (15 months old) but their existing company doesn't qualify due to the existence of a former trade (now ceased but over 10 years old). The solution would be to transfer the new trade to a new company but this wouldn't work if that gave rise to a chargeable gain in the old company.

Any thoughts much appreciated.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Tax on transfer of asset between associated companies

Postby pawncob » Wed Jul 08, 2015 5:34 pm

With a pinch of salt take what I say, but don't exceed your RDA

Incredulum
Posts:2795
Joined:Thu Dec 03, 2009 5:35 pm

Re: Tax on transfer of asset between associated companies

Postby Incredulum » Thu Jul 09, 2015 12:37 pm

This is complicated, and without proper advice you will end up in trouble. However it should be possible to do this without too much pain.

https://www.accountancylive.com/corpora ... ng-hard-do

bob2014
Posts:4
Joined:Mon Sep 29, 2014 9:51 pm

Re: Tax on transfer of asset between associated companies

Postby bob2014 » Sat Oct 17, 2015 4:13 pm

If both companies are controlled by the same persons and the ownership is 75% or more, then CTA 2010 s941 applies ie Succession rules.

In summary:
Plant and machinery is transferred at tax written down value
Losses are transferred with the trade to the new company (and if the transferring company doesnt have other any trading activities, then it may cease to trade)
Assets - if both companies are in the same capital gains group then the transfer is at no gain no loss;
Intangible assets will transfer at tax neutral values
Stocks - if companies connected, then transfer is at market value otherwise transfer is at just and reasonable price

Hope this helps. Im happy to answer any further questions should you have any.

TaxMan34
Posts:1
Joined:Thu Jul 06, 2017 2:40 pm

Re: Tax on transfer of asset between associated companies

Postby TaxMan34 » Thu Jul 06, 2017 2:51 pm

Hi Everyone

Is there any difference in tax consequences on the following 2 options:

Option 1 - Transfer all trade and assets between companies under common ownership at the same time....Nil gain nil loss - assets transfer at twdv ....no issues

Option 2 - Trade transferred from Company 1 to Company 2 on day 1. Certain assets remain within Company 1 and are transferred at a later date. Is this still a trade and assets transfer with no tax consequences?

Or would those assets transferred later not be transferred at twdv (could create balancing adjustments) and potentially certain assets subject to de-grouping charge in the future?

Thanks for your help

T


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