How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3814
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

Hi I hope you can help. I have a small limited company that

Customer Question

Hi I hope you can help.

I have a small limited company that has been trading for 10 years. Currently there are 2 directors and we have authorised 100 ordinary shares @ £1 each, and allotted issued and fully paid 2 of these shares - being 1 share to each of the Directors (myself and my business partner) as follows:-

3. CALLED UP SHARE CAPITAL

Authorised:
Number: Class: Nominal Value: 31.03.13 £
100 Ordinary £1 100

Allotted, issued and fully paid:
Number: Class: Nominal Value: 31.03.13 £
2 Ordinary £1 2

I would like a bit of guidance with the following:

We would like to now redistribute and restructure the allotted shares as follows:

Myself - Director A - 45shares
Business Partner Director B - 45 shares
New Person (not a director) - Jo Bloggs - 10 shares

Please advise how I should go about doing this in terms of what forms require filing with companies house / HMRC and I assume we would then have to physically pay a further £98 inn to the business to represent the additional paid up shares.

Although we have been trading for some time and have built up some equity we would be allocating the 10 shares to the new person the shares for the nominal value of £1 each.

Thanks in advance for your assistance and guidance
A
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello A, I'm Keith and happy to help you with your question.

This is much easier than you might think!

Take the money. 98 quid, into the company, book keeping entry Debit Cash/Bank Credit Ordinary Share Capital.

Issue share certificates as appropriate.

No requirement to tell Companies House until you file your next annual return. This return includes changes in the share capital, issues, names, addresses etc as part of its format.
Customer: replied 3 years ago.

Hi Keith thanks for coming back to me so quickly.


 


I was just looking in to it and should I file a SH01 with companies house top show that we have increased the issued share capital from £2 to £100? I was a little confused as I thought it would ask for the new shareholders name on the form but it seems to just concentrate on the number of shares (or is this SH01 form for something else?)


 


The new guy we are issuing the shares to requires some evidence that he is a beneficial part owner of this business (as we are going through some sub-letting/lease problem issues in our current location) so I guess issuing share certificates for the 10 ordinary £1 shares he holds would be the way to go on this?


 


I believe we don't actually have to issue certificates any more and as you say would normally put his name down for the first time on the annual return and in the accounts (but the share certificates will help in this case)


 


Thinking just as a bit of date evidence file the SH01 (if this is for upping the issued shares) and issue the share certificates - sound okay?


 


Also will HMRC be interested in this transaction as he will be getting 10% shares that in reality are worth much more than the £10


 


Thanks Keith


A


 


 


 


 


 


 


 

Expert:  bigduckontax replied 3 years ago.
Right, I tend to be a bit old fashioned and still issue share certificates! Guidance from LawPack confirms that this practice should continue. If you do then the evidence problem is resolved. Do not forget to enter the new allocations in the Company Register so it is correct should any person wish to see it at the Registered Office.

There is no requirement to inform Companies House at this stage, but you need to tell them within one month of issue on the SH01. My original advice on this was incorrect, deep apologies. You actually have not changed the capital structure, save that instead of being 2 paid, 98 un-issued it is now fully subscribed. You have merely issued authorised capital (the original 100).

There is no requirement to notify HMRC. Their only involvement will be in the event of a share sale which generates a gain. Then it is for the individual to report such matters on their annual self assessment.
Expert:  bigduckontax replied 3 years ago.
Having given you the correct answer I would just comment that in one company I operated we did issue new shares within the authorised level, in that case 1000, and never sent in a SH01, merely reported the transaction at the annual return stage months later. Companies House never batted an eyelid or raised a cheep at the omission!
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support. Please accept my apologies for slightly duff gen in part of my answer (the SH01)!

Related Tax Questions