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Category: Tax
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We have a UK plc company that owns the rights to a feature

Customer Question

We have a UK plc company that owns the rights to a feature film. It raised it's finance through a EIS scheme and has a couple of hundred shareholders. The film has realised some money but insufficient to make a profit. It now has cash at bank but is unable to distribute as a dividend.

It has been decided to set-up a subsidiary company and transfer the rights to the film over to the subsidiary.

The subsidiary will then be split away from it's parent and shares will be issued in this company to the existing shareholders in the same proportion - so if the film generates any additional royalties these can be distributed to the shareholders.

The existing plc will then be disolved and the shareholders will realise their loss and make a claim on their respective personal Tax Returns.

Q1. can you see any problem with this?
Q2. will the shareholders be able to make the claim for loss relief we are assuming a winding up under s.110?
Q3. if the distribution is made in specie are the shareholders rights affected?

What we want to achieve is that we close the existing plc down to avoid ongoing administrative costs e.g. audits and be able to return some of the capital to the shareholders so that they can make their loss relief claim and minimise their loss whilst the shareholders retain the right to any future income.
Submitted: 5 years ago.
Category: Tax
Expert:  touchwoodsden replied 5 years ago.

Will the existing co close having paid all its debts?


Customer: replied 5 years ago.


Rights to film will be transferred to subsidiary and then subsidiary split from parent as sole ltd and

mininal assets e.g. computers will be sold/also transferred

company does not have any debts

will be wound up

Expert:  touchwoodsden replied 5 years ago.

In which case, I can see no reason why you cannot do
this. There is certainly no reason in law why you cannot transfer from one
company to another, any assets provided creditors and shareholders of the
original company are not disadvantaged.

I cannot think why you are doing it this way, but there
is nothing to stop you doing it. Except, as I have mentioned in the previous

Can I help further?

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The thread remains open for us to continue this exchange

Customer: replied 5 years ago.

You have replied from a law perspective but not a tax perspective - will it affect any EIS claimable and or their tax loss claim?


Expert:  touchwoodsden replied 5 years ago.
I will transfer to UK tax for that
Customer: replied 5 years ago.

thank you I await their reply

Expert:  Shantal-Mod replied 5 years ago.

We will continue to look for a Professional to assist you.

Thank you for your patience,

Expert:  Shantal-Mod replied 5 years ago.

I apologize as we have not yet been able to find a Professional to assist you. Do
you wish for me to continue to search for someone to assist you or would you
like for us to close your question at this time?

Thank you for your patience,

Customer: replied 5 years ago.

please continue to seek somebody

Expert:  Shantal-Mod replied 5 years ago.

Thank you for your patience, we will continue to look for a Professional to assist you.

Thank you,

Customer: replied 5 years ago.

Maybe if I rephrase the question somebody may be able to help?

Will a shareholder be able to claim loss relief on losses made in their shareholding of a EIS company, if


a) the company is wound up using a standard members voluntary liquidation with a subsequent distribution in specie


b)a section 110 reorganisation


would like to know if both cases would qualify

Expert:  Shantal-Mod replied 4 years ago.


Please understand it is rare for us not to be able to find the right Professional to assist our customers. We can either return your good faith deposit to the original funding source, or we can keep your deposit on your account here for future questions.

Please let me know how you wish to proceed and again I apologize for any inconvenience this may have caused.

I hope you will give JustAnswer a try again in the future,