How Best to Transfer Company Money to Other Companies I Own?

[WTFH]

Apart from getting advice from your accountant, you'd want to make sure that company 1 actually had the money to lend, and wasn't relying on, say, fixed assets to claim they had cash.
I'd also want to get the accountants to check that the three companies weren't some disguised way of transferring a lot of money from father to son (for example) through an attempt at laundering to avoid inheritance tax, etc.

[ChimpMaster]

I've run my PSC IT contracting company (Company 1) for a number of years and have now set up 2 new Private Limited Liability companies:

Company 2 - runs holiday lets
Company 3 - is an engineering business

Both Company 2 and Company 3 are start-ups.

Company 1 has already transferred money directly to Company 2 & 3 to help establish them.

My question is what is/would have been the best way to do this?

Should this have been as an investment? As a loan? Or as some other form of funding?

In all honesty Company 1 is not seeking to get back the money it has seeded in Company 2 and Company 3.

Thanks in advance.

Ian W

You have options.

Easiest is that it's a loan at 0%, repayable on demand. The loans never have to be repaid until you want to close the company. Easy enough to handle.

Other option is to make Company1 a Holding Company and put the other 2 under its ownership. The funds passed down are then classed as dividends but no tax is due as it's still all within a corporate structure. This takes some work to set up but is great for the long term.

Either way you need an accountant who understands this stuff.

I can recommend my (very good) independent accountant if you need one.

[MasterBait]

Just invoice each other (assuming that the transfer is for work done or goods delivered)
and get an accountant asap

[tomtomagain]

My question is what is/would have been the best way to do this?

....

In all honesty Company 1 is not seeking to get back the money it has seeded in Company 2 and Company 3.

Thanks in advance.

Best way would have been to ask your accountant before transfering the money. Second best way is to ask your accountant now.

I haven't looked into any of this but I presume that company 1 will still need to pay tax on the money given to 2&3 ( otherwise everyone would be transfering cash about ), especially as it is a "gift".

But I'd suggest getting it sorted out properly with your accountant, otherwise it could just look like some massive tax scam to HMRC and you don't want them knocking on your door.

[CoolCat]

I've run my PSC IT contracting company (Company 1) for a number of years and have now set up 2 new Private Limited Liability companies:

Company 2 - runs holiday lets
Company 3 - is an engineering business

Both Company 2 and Company 3 are start-ups.

Company 1 has already transferred money directly to Company 2 & 3 to help establish them.

My question is what is/would have been the best way to do this?

Should this have been as an investment? As a loan? Or as some other form of funding?

In all honesty Company 1 is not seeking to get back the money it has seeded in Company 2 and Company 3.

Thanks in advance.

Ian W

Setup a company in a tax haven, one where reporting requirements are minimal, say Mauritius. Make that the owner of all the other companies. That company owns your international brand name, say "Orinoco". The other companies can stay in the UK. Then the Mauritius holding company charges the other companies a fee for use of the brand name which is pretty much all the profit they would have made otherwise. So the UK companies never show a profit, and hence dont need to pay much tax. The company in Mauritius is in a tax haven so any profit will be taxed minimally, and little reporting requirements so keep everything to yourself.

With me so far? The holiday lets are probably best structured as a company per property, to make it easier to keep track of which are making most revenue.

You want to make sure the money you have already transferred attracts minimal tax, so maybe make that payment for shares is first step. But will need winding along to end up at a sensible position.

[BR14]

i'll handle it for a small service charge.
honest guv.

[ladymuck]

What does your accountant say?

[IanWhitby]

I've run my PSC IT contracting company (Company 1) for a number of years and have now set up 2 new Private Limited Liability companies:

Company 2 - runs holiday lets
Company 3 - is an engineering business

Both Company 2 and Company 3 are start-ups.

Company 1 has already transferred money directly to Company 2 & 3 to help establish them.

My question is what is/would have been the best way to do this?

Should this have been as an investment? As a loan? Or as some other form of funding?

In all honesty Company 1 is not seeking to get back the money it has seeded in Company 2 and Company 3.

Thanks in advance.

Ian W