1c. Corporstion Tax - Selling a Company Flashcards
Selling a company via Sale of shares :
chargeable gains
Ignore if SSE applies
Gain = exempt
Loss = not allowable
Selling a company via Sale of shares :
- stamp duty payable at what %
- by purchased or seller of shares
Stamp duty payable at 0.5% by purchaser of shares
Selling a company via Sale of shares:
Number of related 51% companies
1. Related to what period
Company leaving group
- related for whole accounting periods when leaves group
- not related with companies in new group until the following accounting period
- this decreases number of related companies in old group for the next accounting period
Selling a company via Sale of shares :
- Does a degrouping charge arise if the company leaves the group
- what type of group
- received an asset through what type of transfer
- transfer happened within how many years before leaving the group
- where do you add the degrouping charge
- what if SSE applies
- degrouping charge arise if the company leaves the group
- is in a capital gains group
- receives an asset through a NGNL transfer
- and the transfer happened within 6 years before leaving the group
- you add the de grouping change to the sale proceeds giving you a bigger gain
- if SSE applies then ignore
Selling a company via Sale of shares :
How does it effect the value of assets transferred
- assets transferred with the company at what type of value
- what happens to the capital allowance on TWDV in future
- what happens to the SBA
- does the base cost of assets for chargeable gain purposes change?
- assets are transferred with the company at WDV
- the capital allowance continues to be claimed by the company in the future
- the SBA continues to be claimed by the company on original cost
- the base cost of assets for chargeable gain purposes = unchanged
Selling a company via Sale of shares :
Does the accounting period change
Accounting period unchanged
Selling a company via Sale of shares :
Does VAT arise on the sale of shares
No VAT arises on the sale of shares
Selling a company via Sale of shares :
How does if effect if company leaving loss making group?
1. Time apportion trading losses for accounting period
- group relief possible to old group upto what date
- no group relief from what date period
- group relief is possible to new group from what date
- what about normal loss relief within the company itself available
- Unrelieved trading losses at date of sale
- where does this go - Trading losses bf that go with the company
- when can it be used by that company
- what’s the restriction - How many years after the change in ownership can the trading losses bf cannot be group relieved
- Time apportion trading losses for accounting period
- group relief possible to old group up-to date an arrangement is in place to sell the company
- no group relief is possible from the date of arrangement to date of actual sale normal loss relief within the company itself is available throught - Unrelieved trading losses at date of sale
- go with the company to the new group - Trading losses bf that go with the company
- can be used by that company in the future
- restriction when there major changes in nature or conduct of trade within 5 years starting 3 years before the change in ownership - Trading losses bf cannot be relieved for 5 years after change in ownership
Selling a company via Sale of shares :
Advantages
- when SSE apples
- will BA/BC arise
- loss relief
- no tax on disposal if sse applies
- no ba/ bc arise
- loss relief goes with the company to the new group
Selling a company via Sale of shares :
Disadvantage
- transferred
All of the company is transferred
- assets and liabilities
Selling a company via Sale of trade and assets
1. Chargeable gain
- chargeable gain/ allowable capital loss arises on disposal of what chargeable asset in the business transferred to the new company
- does this include cars or plant and machinery with value and cost less that 6,000
- what type of relief might be available
- Taxable trading profit / allowable trading expense on disposal of intangible assets
Is loss on sale of good will allowable
- what type of relief may be available
- Chargeable gain / allowable capital loss areas on disposal of every single chargeable asset in the business transferred to the new group company
E.g land and buildings
- but doesn’t include card, plant and machinery with value and cost less than 6k
- roll over relieve May by available - Taxable trading profit / allowable trading expenses on disposal of intangible assets
E.g goodwill, licenses , franchise etc
- except loss on sale of goodwill = non trading debit
- intangible roll over relief may be available
Selling a company via Sale of trade and assets:
Stamp duty
- SD or SDLT payable
- by who
- on what assets
- what inclusive price
STDLT payable by purchase on land and buildings on VAT inclusive price
Selling a company via Sale of trade and assets:
Number or related 51% companies
- does the company leave the group
- which AP will it be related to
- what if the company sells it’s only trade
- what would happen to the number of related companies in old group next AP
-The company does not leave the group
- related to the whole of AP
- if the company sells it’s only trade = will become dormant
- decreases number of related companies in old group next AP
Selling a company via Sale of trade and assets:
Degrouping charge?
No degrouping charge
- only arises in sale of shares in a company
NOT on the sale of trade and assets
Selling a company via Sale of trade and assets:
Value of assets transferred
- assets transferred to new group company at what rate
- balance changes and balance allowances arise for which company
- SBA claimed on what cost over remaining life
- base cost of assets for chargeable gain purposes =
Value of assets transferred
- assets transferred to new group company at market value
- bc and ba arise for old company
- SBA claimed on original qualifying cost over remaining life
- base cost of assets for chargeable gain purposes = market value
Selling a company via Sale of trade and assets:
How will the accounting period end
If the company sells it’s only trade
- it’ll cease to trade and ap will end
Selling a company via Sale of trade and assets:
What’s the implication VAT
- for VAT, what rule will probable apply
- will it be a taxable supply
- will Vat arise on sale
- unless it’s what type of asset in which there’s an option to tax
- for VAT, transfer of going concern rule will probably apply
- won’t be a taxable supply
- VAT will not arise on sale
- unless transfer of building and land in which there’s an option to tax
Selling a company via Sale of trade and assets:
Losses
If co. Whose trade and assets are sold = loss making
- trading losses stay with which company
- is it transferred to the new group company
trading losses have limited use:
possible claims:
- what period claim agains total period before qcd relief
- group relief go to new or old group
Remaining loss:
- useless as can’t cf if the company does what to trade?
If sells it’s only trade and ceases to trade
- what loss carry back
- for how many years
Against total profits before QCD relief
If co. Whos trade and assets are sold = loss making
- trading losses stay with old company
- not transferred to new group
Trading losses have limited use:
- current year period claims against total period before QCD relied
- group relief got to old group
Remaining loss:
Useless as can cf if the company cease to trade
If sells it’s only trade and ceases to trade:
Terminal loss carry back for 3 years agains total profits before QCD
Selling a company via Sale of trade and assets:
Advantages
1. Transfer to purchaser
Can transfer just the assets the purchaser wants
Selling a company via Sale of trade and assets:
Disadvantages
- gains
- ba bc
- losses
- taxable gains - can be deferred but not exempt
- ba and bc arises
- losses do not go to new group
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
Chargeable gains
- Intra group assets = intra group transfers within 75% group at NGNL
- no chargeable gain / allowable capital losses arises
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
Stamp duty land tax
Intra group transfers = exempt SDLT
No SDLT payable
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
Degrouping charge ?
No degrouping charge
- only arises on the sale of the shares in a company
NOT on the sale of trade and assets
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
Value of assets transfered
- assets transferred to new co. At what value
- bc/ba arise?
- capital allowances claimed by new co in future but now allowances on the assets transferred?
- new company continues to claim SBA on what cost?
Special rule for asset transfers
- asset transferred to the new company at TWDV
- no BC / BA arise
- capital allowances claimed by the new company on TWDV in future
- but no AIA OR FYA on the assets transferred
- new company continues to claim SBAs on original cost
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
Accounting period
If a co. Transfers it’s only trade
- what will happen to the trade- what will happen to the AP
If a company transfers it’s only trade
- it will cease to trade
- the AP will end
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
VAT
-what rule will probably apply
- is it a taxable supply
- will VAT arise on sale
- unless what type of assets on which there’s an option to tax
- what if it was in a VAT group
- TOGC rule will probably apply
- won’t be a taxable supply
- cat will not arise on sale
- unless building and asset is transferred on which there’s an option to tax
- if I’m VAT group = still no VAT
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
Losses
- can it be transferred with the trade
- can be used against when profits
- can be transferred with trade
- can be used agains future profit
Transfer of a trade / asset within a 75% group , w/o a change in ownership:
Advantages
- gains
- ba/bc
- loss relief
- choice of asset transfer
- no taxable gains
- no ba bc arise
- loss relief goes with the trade to the new company in the old group
- can just transfer the assets you want
What’s a hive down
- create new what % subsidiary
- transfer only what of target company required by the ultimate purchase into the new subsidiary
- sell shares in the sub to who
- creates new 75% sub
- transfer only trades and assets of target company require by the ultimate purchaser into the new sub
- sell shares in the sub to purchaser
Hive down - on transfer of trade within 75% group
Chargeable gain
Transfer of assets = intra group transfers within 75% group at NGNL
No chargeable gain / allowable capital loss arises
Hive down - on transfer of trade within 75% group
Stamp duty
Intra group transfers = exempt SDLT
Hive down - on transfer of trade within 75% group
Value of assets transferred
- assets transferred to new co. At what value
- bc ba arise?
Assters transferred to the new co. At TWDV
- no bc or ba arise
Hive down - on transfer of trade within 75% group
Losses
Can trading losses be transferred with trade to the new company
Yes
Hive down - on sale of shares
Chargeable gain
Chargeable gain / capital loss on disposal of shares in the company
Ignore if SSE applies
Hive down - on sale of shares
Stamp duty
- stamp duty payable at what % by who
- SDLT exemption on intra group transfers is withdrawn if sell shares within what year
- stamp duty payable at 0.5% by the purchaser of the shares
- SDLT exemption on intra group transfers is withdrawn is sell shares within 3 years
Hive down - on sale of shares
Value on assets transferred
- assets transferred with the new company to new group at what value
- ba bc arise
- new company continues to claim SBA on what cost
- does degrouping charge arise
-Assets transferred with the new company to new group at TWDV
- ba bc does not arise
- new company continues to claim SBA on original cost
- degrouping charges arises
