Ltd Company Investment Funds

[chavvy]

Hi All,
I have been trawling this site and the web for hours and have pieced together some understanding, but there are still gaps.

My company is starting to accrue a decent warchest and I am going to start offloading some to SIPPS, but there is going to be money left in the company bank account that I want to start getting a return on.

In the future I may want to liquidate the company and get the 10% CGT relief (or whatever its called).

I don't want to go off and play the stock market, but am interested in either some growth or income investment funds.

I am thinking of opening up a company investment account with Hargreaves Landsdowne.

Some questions I have are:

1) I understand that the value of the assets held in investments can't be too large as the company will start to be seen as a CIC (and I won't get the 10% relief mentioned above). However I would like some illustration of this. Is this a ratio between the value of (e.g. investement funds) and the dormant cash in the company?

2) What would be the ramifications of holding £200k in investments funds? £100k? £50k?

3) Any investment profit is company profit and is taxed as per CT, but growth investments are just a point in time valuation, there is only profit if they are sold - how does this work in terms of company returns and CT?

Any help appreciated.

[northernladuk]

Wouldn't anything to do with your company money and tax mean your accountant would be a good start?

Did you not find a solution when you had 150K back in 2010?

[chavvy]

Wouldn't anything to do with your company money and tax mean your accountant would be a good start?

I did ask and my accountant and he put me in touch with an IFA who will go away and come up with a full plan that will cost me thousands. I have asked the accountant again, but in a different manner and am awaiting a response.

I am not convinced that my accountant knows as much about this sort of thing as some of the posters on this forum, hence my post.

[TheFaQQer]

2) What would be the ramifications of holding £200k in investments funds? £100k? £50k?

You would have to consider carefully the implications of being an investment company when you come to close down (assuming that the ER rules have not changed between now and then, which could be a big assumption).

[BR14]

So you don't want to pay for professional advice, but you're happy to risk lots of money based on unprofessional advice because it's free?
good luck with that.

[chavvy]

Wouldn't anything to do with your company money and tax mean your accountant would be a good start?

Did you not find a solution when you had 150K back in 2010?

Ha! you've got a good memory. That time I liquidated.

I know don't plan on liquidating so soon this time and might have this company for 5, 10 years or until I retire.

[chavvy]

So you don't want to pay for professional advice, but you're happy to risk lots of money based on unprofessional advice because it's free?
good luck with that.

I am getting good advice on what to invest in (which is what the IFA were offering), my questions are fairly straightforward questions about mechanics and tax liabilities.

But thanks for your fantastic insight nonetheless.

[northernladuk]

The rules about gaining a tax advantage when liquidating have changed. You can't restart in the same line of work (or some odd wording like that) for two years. Worth reading up on that to get your thinking right if you are trying to put together a long term plan.

[chavvy]

You would have to consider carefully the implications of being an investment company when you come to close down (assuming that the ER rules have not changed between now and then, which could be a big assumption).

Well that was one of my questions really.

Taken from the link:

"Compare this to an Section 1030A claim without ER, the rate increases to 18%. A claim for ER could not be made if there was ‘significant’ investment activity. However, what is significant is not defined by statute, although HMRC say they will look at whether a company’s non-trading activities amount to more than 20% of income, assets, expenses or time taken by employees. "

I would like to know if this is now completely irrelevant but if not, try and put some illustrations into it.

[chavvy]

The rules about gaining a tax advantage when liquidating have changed. You can't restart in the same line of work (or some odd wording like that) for two years. Worth reading up on that to get your thinking right if you are trying to put together a long term plan.

I thought I responded to this. I'll try again.

Thats interesting; I think that that means that the next time I liquidate it really will be the end, and this might be in 10 years time. So my questions still stands, but with added caveat that now there may be a large amount of money in investments funds.