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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi, I have a question. I am now preparing CT600 for second

Resolved Question:

Hi, I have a question.
I am now preparing CT600 for second year trading.
When my accounts were prepared by accountant for the first year, he inserted called up share capital £2000.
When I started company I paid in £2000 startup money, and with companies houses I setup 100 shares worth £1.
So I assume that AC70 & AC273 box should be 100 not £2000 ? I might be wrong though. So that £2000 or £1900 if assuming shares are paid should be somewhere else?
I would like to take that £2000 back, if I knew it would be stuck in business I would just pay in £100 which would cover shares, that would make it easier.

CT600 was in balance and all got submitted fine, but I am still unsure if that was the best option. I am worry that I am liable now for £2000 instead £100?

Hope someone can help.... As first year was submitted I am not even sure if it can be changed or is it worth it....

Thanks
Krys
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please clarify for me...

When you filed your first/second annual return with Companies House, what have you reported as called up share capital...100 shares at £1 each or 2000 shares at £1 each?

Many thanks
Customer: replied 2 years ago.

2000 shares at £1 each

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your prompt reply...

Unfortunately, you have reported as 2000 shares as issued capital. It is not easy to take your £2,000 back if was treated as payment for issue of shares.

You could write to Companies House and notify that accounts and/or annual returns have shown incorrect called up share capital and that it should be 100 shares at £1 each and not 2,000 shares at £1 each and apologise for inadvertent error. You should file amended abbreviated accounts showing the correct called up share capital of £100 and reflecting the balance £1,900 as director's loan. Once these amended accounts are accepted then you would be able to withdraw £1,900 subject to available cash funds within company bank account.

You would submit your CT600 to reflect above entries.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Ok, thanks.


 


you have confirmed what I thought, and I am pissed off with my accountant as that's what I said!!!


 


Anyway, as I have reported 2000 shares on CT600 but with companies houses when I created company I said 100 at £1, should be changed at companies house? Or is that not a problem?


I have read somewhere below:


"It is possible for the share capital account(my £2000) to exceed the nominal value of the number of shares multiplied by their par value where other funds, such as capitalised profits, are transferred to the account"


 


What exactly does that mean?


 


Also, hopefully last thing, is there no way of reducing shares? like redeem shares or withdraw? So I could take that money back without redoing CT600?


 


Don't want to go through the hassle, so let say I would leave as it is (if that's ok? and one day when company get's closed will I be able to take that money out?



Thanks again!

Expert:  taxadvisor.uk replied 2 years ago.
Kry, thank you for your reply.

Where the value of share exceeds the par value then the excess is called share premium.
Reducing shares is not an easy process.

If you are not keen in putting the share capital right by sending amended accounts as suggested, then you should maybe stick to your last remark..."Don't want to go through the hassle, so let say I would leave as it is (if that's ok? and one day when company get's closed will I be able to take that money out?"

I hope this is helpful.
Customer: replied 2 years ago.

Hmm,


 


Ok, so should I amend companies houses shares? They are still showing:














Total issued:100
Currency:GBP
Total Aggregate Value:100

 


And it should be 2000 as I got it wrong in CT600. Or does it not matter?


 


in my remark I was asking if I will be able to take that £2000 out when I close the company?


 


Thanks


 

Expert:  taxadvisor.uk replied 2 years ago.

Krys, thank you for additional information...

As the Companies House records show 100 shares at £1 each, you should amend your CT600 return to reflect this.

You should show £100 as called up share capital and £1,900 as director's loan within creditors either part of Box AC58/AC59 or AC64/AC65.

This would then enable you to withdraw this amount (£1,900) funds permitting with ease.

You will only be able to take £2,000 out of the company when you close it if there were funds to be had.. you have an alternative..correct the accounts now and have the ability to take £1,900 right away.


I hope this is helpful and answers your question.

 

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

Customer: replied 2 years ago.

can I insert that £1900 as a investment instead of director loan?


Would I still be able to take investment out? which boxes would that go if you don't mind asking?


Thanks

Customer: replied 2 years ago.

Hmm, let say I don't want take that money out, can I just somehow raise shares to match ct600? Can I do anything to not have to submit ct600 again?


Thanks

Expert:  taxadvisor.uk replied 2 years ago.
Krys, my advice is that you should show it as a loan... as investment means investing in the share capital of the company.

Although your £1,900 is an investment to fund the working capital of the company, by calling it short term loan to the company, it is easily accessable. You don't have to take the money out.

If you wish it to be permanently tied up in the company, then you will have to increase your called up share capital to £2,000.

If I were you, I would keep my option to take money out when needed rather than have increased share capital.

I hope this is helpful and answers your question.
Customer: replied 2 years ago.

Hi, thank you again, your help is much appreciated.


 


To summaries:


 


Option 1 - Re-submit CT600 with called up share capital £100 and director loan £1900.


 


Option 2 - Increase shares with companies house. Can I change them with today date? even that it was CT submitted ages ago? wont that cause problem?

Expert:  taxadvisor.uk replied 2 years ago.
The two options are well summarised by you.
Option 2 - you can reflect change in share capital today. It would be preferable to reflect the date of increase in share capital to agree with CT600 dates.

I would still opt for option 1 as most convenient and practical.

I hope this is helpful and answers your question.

 

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

Customer: replied 2 years ago.

Hi,


 


Last question. If I would made changes and fill CT600 with £1900 of director loan, would there be any interest implications, if I have not charged business any interest.


Also, as those money were initial investment money which I could take out after a month of trading because profits were in, could I still put this as a directors loan? or should it be an investments and they will be stuck in the business?


 


Thanks


 

Expert:  taxadvisor.uk replied 2 years ago.
Krys, thank you for your reply/

There are no tax or interest implications if you were to treat £1,900 as a loan to the company and show it as director's loan within creditors.

Yes, you can treat part of initial investment as a loan and the advantage of doing it is to have the flexibility of taking out that sum without any tax implications.

I hope this is helpful and answers your question.
Customer: replied 2 years ago.

hi,


you said part of investment. does that mean i cant take full £1900 out?


obviously £100 is shares and £1900 investment, but would that count as a part of it?

Expert:  taxadvisor.uk replied 2 years ago.
Krys, I was referring to the whole £1,900 being part of a total investment of £2,000, the other £100 being called up share capital.

You can take full £1,900 out.

I hope this is helpful.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4882
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes

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