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taxadvisor.uk, Chartered Certified Accountant
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am the owner and sole shareholder of a UK company and a Czech

Customer Question

I am the owner and sole shareholder of a UK company and a Czech company. I want to sell the shares that I hold in the Czech company to the UK company. Normally two people decide what the Value is however I am negotiating with myself. Are there guidelines to follow and to ensure that the UK tax authorities do not consider I have overpaid. From a personal income tax perspective (I am tax resident in Czech Republic) it is in my personal interest for the sale value to be as high as possible and there are no known restrictions when I have consulted with a Czech accountant.
Finally on the above issue how would you normally value a consulting company with close to zero fixed assets- people, clients, database etc
Furthermore what are the ongoing tax liabilities for the UK company owning a Czech company if any.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

There are no hard and fast rules on valuation of a company.. at the end of the day it is a price a buyer is happy/willing to pay and a seller is happy/willing to accept. HMRC don't normally get involved in the matter of price paid as long as the transaction is at arm's length.

There are many factors that are considered in arriving at a valuation, e.g. if the business is a going concern, one would look at profitability, client base, growth opportunity etc.

There should be no tax liabilities for the UK company relating to the Czech company prior to its ownership.

Thereafter, UK company will pay tax on any income that it derives from the Czech company

You may find information on overseas aspects of corporation tax provided here useful

http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_mar13_f6_overseas.pdf

and here

http://www.grant-thornton.co.uk/pdf/taxation-of-foreign-dividends.pdf


I hope this is helpful and answers your question.

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