Moving money between companies

**Lance** · 28 January 2020, 14:02

Originally posted by peel3000 View Post

Hi all

Quick question, regarding the above..

I have a Ltd company and would like to set up an SPV to invest in property..
My question is how can I transfer money from my Ltd company to the SPV..

I understand the cash will not be treated as an 'expense' and would therefore be subject to corporation tax (fair enough).
I don't want to loan the cash - as I will be shutting my Ltd company down (probably) before April - not sure how any repayments would work..

Can I just gift the cash? I read that as long as the cash is used for proper business purposes, it should be fine.. However, my accountant seems to 'think' only a loan is possible..

Thoughts/advice appreciated!

Many thanks,

NP

Ask your accountant.... Oh you already did but didn't like his answer.

You can use the money as capital. In which case your LTD will be the owner of the SPV. That's no use if you want to close the company.
That's about it.

Sorry you can't avoid paying tax like that. To get it out of the company you're going to have pay CGT, income or dividend tax.
Perhaps you can convert your LTD to an SPV after you've finished trading. Ask your accountant about that.

**wattaj** · 28 January 2020, 14:04

Alternatively, MVL the old company, tax the tax hit (circa 10%?), then open your shiny, new SPV.

**peel3000** · 28 January 2020, 14:14

Hi Lance,

Yes, I did, and it was a 'her', not a 'him'.

Not relevant as I'm closing it..

That's not avoiding tax at all.. What are you talking about? The business would be using the cash, not me...
It was my understanding that this WAS possible, as long as you can satisfactority prove that the cash stayed in the business and didn't find it's way to me directly..
Any personal income from the SPV (as div's, salary or whatever) would be subject to the appropriate income taxes..

**peel3000** · 28 January 2020, 14:17

Originally posted by wattaj View Post

Alternatively, MVL the old company, tax the tax hit (circa 10%?), then open your shiny, new SPV.

If you can move money between companies for nothing (assuming all above board), why would I take a 10% hit - only to then re-invest it into my company and potentially pay even more tax getting it back out?

It's no different, really, to me changing the business type from what it currently does to an SPV - Though I would prefer to have a clean split..

**wattaj** · 28 January 2020, 14:18

Originally posted by peel3000 View Post

...It was my understanding that this WAS possible, as long as you can satisfactority prove that the cash stayed in the business and didn't find it's way to me directly...

Citation? Or was it a chat down the pub?

**WTFH** · 28 January 2020, 14:21

Originally posted by peel3000 View Post

Hi Lance,

Yes, I did, and it was a 'her', not a 'him'.

Not relevant as I'm closing it..

That's not avoiding tax at all.. What are you talking about? The business would be using the cash, not me...
It was my understanding that this WAS possible, as long as you can satisfactority prove that the cash stayed in the business and didn't find it's way to me directly..
Any personal income from the SPV (as div's, salary or whatever) would be subject to the appropriate income taxes..

OK, so you don't like your accountant's answers, and you don't like Lance's answers.

If you didn't close your LTD, then you could transfer the money having the Ltd as the owner of the SPV.
Since you've decided that you refuse to do that, then you'll have to get the money out of the Ltd into your personal account, then re-invest it in the SPV.

You can't just "gift the cash" as it's not yours to gift, it belongs to the Ltd.

**peel3000** · 28 January 2020, 14:22

Originally posted by wattaj View Post

Citation? Or was it a chat down the pub?

Does it matter? It was read online - so here I am trying to find some corroberation, rather than taking it at face value..

**wattaj** · 28 January 2020, 14:26

Originally posted by peel3000 View Post

If you can move money between companies for nothing (assuming all above board)...

You can't. Not if you want to close down the first company and walk away.

Your options are changing the SIC for your first company; loans to the SPV whilst keeping your first company in play; slowly withdrawing funds via salary/dividends to fund the SPV before killing the first company; or MVL.

Your call.

Next?

**wattaj** · 28 January 2020, 14:26

Originally posted by peel3000 View Post

Does it matter? It was read online - so here I am trying to find some corroberation, rather than taking it at face value..

Yes. Link?

Moving money between companies