Transfer shares from my wife before liquidating the company

[TheCyclingProgrammer]

Nope she needs to have been an employee / director for a significant period of time.

FWIW, company secretary does qualify you for ER/BADR (because it’s any company officer) but you’re right about the timescales. I think it’s at least 2 years, presumably to stop exactly this scenario.

[eek]

My bad, and it was literally on the next line

I wonder if it's as simple as adding the wife as a secretary now. Best to ask the professionals

Nope she needs to have been an employee / director for a significant period of time.

[ChimpMaster]

You appear to have missed the part of that article where it also correctly states that you need to be a company officer or employee.

My bad, and it was literally on the next line

I wonder if it's as simple as adding the wife as a secretary now. Best to ask the professionals

[TheCyclingProgrammer]

IF that's what the accountant said, sack him.

A 5 second Google will teach you lots: What do you need to know about Business Asset Disposal Relief (BADR) | SG Contractor Accounting

How do I qualify for BADR?
To qualify for relief, the following must apply:

You have owned the shares in your limited company for at least 2 years before the date you sell it
You have owned at least 5% of the shares and voting rights for that prior 2 year period
You must also be entitled to at least 5% of either:
profits that are available for distribution and assets on winding up the company, or
disposal proceeds if the company is sold

You appear to have missed the part of that article where it also correctly states that you need to be a company officer or employee.

[ChimpMaster]

I spoke to my accountant who told me that for a shareholder to be eligible for BADR (ER), the person has to be actively involved in the company: be an officer or an employee of the company, i.e. on the company payroll.

I do not have enough knowledge on this matter, and don't have much confidence on my accountant's expertise in this area either, hence the question is being posted here for advice. Any help will be greatly appreciated.

Another question: what's the period restriction for her having had to hold the shares before the liquidation?

IF that's what the accountant said, sack him.

A 5 second Google will teach you lots: What do you need to know about Business Asset Disposal Relief (BADR) | SG Contractor Accounting

How do I qualify for BADR?
To qualify for relief, the following must apply:

You have owned the shares in your limited company for at least 2 years before the date you sell it
You have owned at least 5% of the shares and voting rights for that prior 2 year period
You must also be entitled to at least 5% of either:
profits that are available for distribution and assets on winding up the company, or
disposal proceeds if the company is sold

[ian2013]

Not much info to go on from his message but I think it's because she hasn't held the shares long enough to qualify.

I spoke to my accountant who told me that for a shareholder to be eligible for BADR (ER), the person has to be actively involved in the company: be an officer or an employee of the company, i.e. on the company payroll.

I do not have enough knowledge on this matter, and don't have much confidence on my accountant's expertise in this area either, hence the question is being posted here for advice. Any help will be greatly appreciated.

Another question: what's the period restriction for her having had to hold the shares before the liquidation?

[Lance]

Not much info to go on from his message but I think it's because she hasn't held the shares long enough to qualify.

makes sense.

Wouldn't gifting the shares, just before a capital distribution have other problems though?
I'm not sure that Arctic systems case covers this.
And GAAR is very definitely in place for exactly this sort of thing.

Add to that the 'backdating' of share distributions (or fraud as I like to call it), and maybe, just maybe, the OP should probably just do the capital distribution and pay up as required IMO.

[ChimpMaster]

Who's told you that your wife cannot claim BADR (ER)?
Are you speaking to an insolvency practitioner about this? And what do they say?

Not much info to go on from his message but I think it's because she hasn't held the shares long enough to qualify.

[northernladuk]

We need a sticky on what you can and can't get away with here. This is the third of fourth wife tax mule post and I'm sure it's just the tip of the iceberg so could do with the real deal before we get deluged with hairbrained schemes to aggressively avoid tax.

[Lance]

I would like some advice on transferring shares from my wife to me before shutting down my company.

I am planning to shut down my company due to the IR35 changes. I have been working inside IR35 for more than a year now so it doesn't seem to be worthwhile to keep my ltd company running as it costs me to do so. My wife and I have equal shares in the company but she is not employed by the company. I understand that as it stands, if I shut down the company and claim Entrepreneur Relief (or Business Asset Disposal Relief as it's called now), her half won't be eligible for the relief. I was told that it's possible to get her to transfer her shares back to me before the liquidation.
I would like to know if this is indeed allowed? Any possible complications will this cause given it's changed just before the company closure?

Up until Sept 2019, the share split between us was 70:30 in my favour, we changed that to 50:50 March 2020 and backdated on the form to Sept 2019.

Who's told you that your wife cannot claim BADR (ER)?
Are you speaking to an insolvency practitioner about this? And what do they say?

[ian2013]

I would like some advice on transferring shares from my wife to me before shutting down my company.

I am planning to shut down my company due to the IR35 changes. I have been working inside IR35 for more than a year now so it doesn't seem to be worthwhile to keep my ltd company running as it costs me to do so. My wife and I have equal shares in the company but she is not employed by the company. I understand that as it stands, if I shut down the company and claim Entrepreneur Relief (or Business Asset Disposal Relief as it's called now), her half won't be eligible for the relief. I was told that it's possible to get her to transfer her shares back to me before the liquidation.
I would like to know if this is indeed allowed? Any possible complications will this cause given it's changed just before the company closure?

Up until Sept 2019, the share split between us was 70:30 in my favour, we changed that to 50:50 March 2020 and backdated on the form to Sept 2019.