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bigduckontax
bigduckontax, Accountant
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I own 10% of my current company which is worth quite a chunk

Customer Question

I own 10% of my current company which is worth quite a chunk of money now. I now wish to setup a new US company and wish to transfer my stock into the newCo. Will I be liable for tax if I do this?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
I assume by your term 'transfer my stock' that you are using US terminology and wish to sell your 10% shareholding with the intention of employing the cash elsewhere.
Here is the guidance from HMRC Help Sheet 290 which covers Business Asset Roll Over Relief:
'Your personal company
Your personal company is any company in which you can exercise 5% or more of the voting rights. You can claim relief if you dispose of assets that you’ve provided for your personal company and that have been used in its trade. The new assets you acquire must also be provided to be used in the trade of that personal company.'
There are time limitations. Here is Help Sheet 290 again:
'You must acquire the new assets, or enter into an unconditional contract for the acquisition of the new assets, in the 12 months before, and 36 months after the disposal of the old assets. HMRC will extend these time limits if:
You can demonstrate that you had a firm intention to acquire new assets within the time limit
You were prevented from meeting the time limit by some fact or circumstance beyond your control
After being prevented from meeting the time limit you acted as soon as you reasonably could'
I do hope That I have shed some light on your query for you. You can find the Help Sheet in full here:
https://www.gov.uk/government/publications/business-asset-roll-over-relief-hs290-self-assessment-helpsheet/hs290-business-asset-rollover-relief-2015#period-for-reinvestment
Customer: replied 2 years ago.
Hi Keith, I was under the impression I could transfer the shares in my current company, allocated to me personally, to the new U.S. Company so it now becomes the owner of the shares. So not selling to take the cash but transferring ownership. Does that make sense and if I do that does it create a personal cgt or other tax liability?
Nigel
Expert:  bigduckontax replied 2 years ago.
I am of the opinion that that would constitute a disposal of your shares for CGT purposes Nigel. As you seem to be receiving nothing in return I cannot see how roll over relief could take place. If your are a director or employee of the company Entrepreneurs' Relief might apply limiting your CGT to a flat rate 10%.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.

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