Reply to: Invoice paid through shares.

[NickNick]

Yep it's coming back to me now, £1 i think the shares where bought for and that sofa going up in flames has brought back the memories.

Have you received dividends on them in the past? If so, then how did you declare them? As company income or personal? If not (which seems likely given the info here) then I'm gong to guess that they want to pay a dividend out and don't want you to get that cash.

EDIT:
Sorry, I meant your friend, not you of course...

[woohoo]

Irrespective of who the shares are registered to as any asset they belong to the company. They are held in trust for it.

So flogging them and trousering it (even after worrying about CGT) would be committing all sorts of offences

But in this sort of situation it would have been fairly common for the debt to be written off and the director to have bought the shares from the company at a fairly nominal price based on the apparent worth of the shares at the time and this to be debited to the DLA. Stops the company from owing said changes.

It wouldn't be unusual for the details of this arrangement to have been lost down the back of the sofa either.

Yep it's coming back to me now, £1 i think the shares where bought for and that sofa going up in flames has brought back the memories.

[woohoo]

Out of curiosity are they shares worth more now than the original invoice? Depending on how desperately you need the money might be worth holding onto them.

They must want them for a reason

They are worth more than the original invoice and the more I think about it keeping hold is probably the best thing.

[woohoo]

So hopefully amount is less than CGT limit?

Why not hold onto them and get some dividends?

Imagine if the company turned into the next Microsoft! You could be the next Paul Allen!

This time next year rodders.

Nope not posting the amount here

[woohoo]

My friend thanks you for your help. And of course he heeds your warnings about doing things right.

[ASB]

Irrespective of who the shares are registered to as any asset they belong to the company. They are held in trust for it.

So flogging them and trousering it (even after worrying about CGT) would be committing all sorts of offences

But in this sort of situation it would have been fairly common for the debt to be written off and the director to have bought the shares from the company at a fairly nominal price based on the apparent worth of the shares at the time and this to be debited to the DLA. Stops the company from owing said changes.

It wouldn't be unusual for the details of this arrangement to have been lost down the back of the sofa either.

[VillageContractor]

A while back I did a bit of work for a client that was having problems. The client said they could not pay my invoice but offered me shares in their company. I didn't think the shares would be worth anything so the accountant wrote it off as bad debt.

Anyway, now the client wants to buy back the shares. Not decided on selling them but how would this income be reported? Would I just add it to my sales/profit, then corp tax would apply? Would I need to tell HMRC that it's related to a bad debt write off? Can I just take the cash in my private bank account and blow it on the ponies?

And yes I will ask my accountant.

Out of curiosity are they shares worth more now than the original invoice? Depending on how desperately you need the money might be worth holding onto them.

They must want them for a reason

[BrilloPad]

Well i had thought they where registered to my friends company but actually on checking its registered to my friend.

So hopefully amount is less than CGT limit?

Why not hold onto them and get some dividends?

Imagine if the company turned into the next Microsoft! You could be the next Paul Allen!

[WordIsBond]

Yeah, don't just trouser the cash, these things have a way of coming back to bite you and it isn't worth it. You are getting money you didn't expect, that's a win even if you have to pay some of it in tax. If you just keep it and don't do it right, you might end up losing it all and worse if HMRC catch you at it. Tax avoidance is often the smart thing to do, but tax evasion is always stupid.

[Lance]

Well i had thought they where registered to my friends company but actually on checking its registered to my friend.

"so no corp tax just CGT to worry about" is what your accountant might say.
You can still trouser the cash if he pays you cash as companies house don't see the transfer value just the transfer.

CGT has a £11k threshold anyway so being honest may be the same as trousering.
Capital gains tax allowances and rates - Capital gains tax explained - Tax - Which? Money

[SimonMac]

IANAL/A but you would need to work out the CGT on the Shares, but if the total value is less than £11,100 there would be nothing to pay

[woohoo]

Perfect. So who are the shares registered to? Yourself or the your company?

Opppss. I mean to our friend or to his company?

Well i had thought they where registered to my friends company but actually on checking its registered to my friend.

[BrilloPad]

I'm asking for a friend of course. And only posted on here and HRMC forum so should be ok.

Perfect. So who are the shares registered to? Yourself or the your company?

Opppss. I mean to our friend or to his company?

[Lance]

I'm asking for a friend of course.

It's my friend who'd trouser it of course.

[woohoo]

As long as you tell no-one, you can trouser the cash.

So don't go posting about it anywhere. No posts on internet forums.

I'm asking for a friend of course. And only posted on here and HRMC forum so should be ok.