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bigduckontax, Accountant
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I am completing my confirmation statement. I have a limited

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Hello, I am completing my confirmation statement. I have a limited company and am a consultant. Company is not VAT registered and I am an Sme. Last year I raised some money from a SIPP. How do I describe the £45,000 preference shares in the confirmation statement? Thank you

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

Just list them as part of the share capital. In my opinion, however, it would be a more flexible arrangement if they were classified as a loan to the company and thus more easily repaid at some future date.

I do hope that you have found my reply of assistance.

Customer: replied 10 months ago.
Thanks for your help. I made an investment in my company from a personal pension and I haven't made enough profits to pay the coupon. They have informed me I can do this next year without penalties. So should I list the £45,000 as called up share capital and 'shareholders funds'?

I see, that does make a difference so my suggestion regarding loans is inappropriate.

Your approach is correct.

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 10 months ago.
Are the shares counted as 'profit' - I have used some of them as working capital

No, you have issued shares to yourself, that is one transaction. What the company does with the moneys paid in is their affair and in the scenario set out in your question, its use as working capital is quite appropriate. Remember you and the company are separate legal entities.

Customer: replied 10 months ago.
Thank you. So when it describes 'called up share capital no paid' what does that mean?

It is not called up capital not paid, but simply fully paid up capital. If an agreement had been made to issue shares but not pay anything up front into the company then these would be issued but not paid up shares, but that is not the case here.

Customer: replied 10 months ago.
Ok and final question (thank you) - where it says Capital and Reserves I should put £45,000 'called up share capital' I understand. It says underneath profit and loss account - so I presume I put company profits in there which were only £4,670 and the remaining £40,330 is 'shareholders funds'. I presume I don't have to pay tax on shareholders funds? I presume that as the requested coupon payment to the SIPP pensions administrator of £6,000 is therefore separate to the confirmation statement. How do I describe the coupon on the abbreviated balance sheet or is this a separate issue with the Administrator? Thanks so much

Like all final accounts there are two bits, the Profit and Loss Account (P&L) and the Balance Sheet (BS). The first essential is to ensure that the BS actually balances and that where data is common to both the P&L and the BS that is corresponds. You do not pay any tax, the company will be liable to Corporation Tax (CT) on any surplus made, the current rate is 19%. You may not realise this, but within the EU the UK is considered a tax haven because of its low rate of CT.

Please expand on the 6000 quid 'coupon payment' to the SIPP pensions administrator.

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 10 months ago.
Thank you - the coupon is : Details of SIPP Investment in the Company
Type of share: Cumulative Redeemable Preference Shares
Number of shares: 45,000
Purchase amount: £45,000.00
Purchase date: 23 May 2017
Redemption date: 23 May 2022
Payment of Coupon to your SIPPThe preference shares are held by Morgan Lloyd SIPP Trustees Ltd (as trustee of your SIPP arrangement) on behalf of your SIPP arrangement.45,000 cumulative redeemable preferences shares of £1.00 are held by Morgan Lloyd SIPP Trustees Limited, and these shares have an attaching coupon rate of 15%, therefore the annual coupon due to your SIPP arrangement is £6,750.00If sufficient distributable profits have been made by the Company, your SIPP arrangement is legally entitled to a coupon on the preference shares it holds. The coupon is payable without resolution of the directors or the Company in a general meeting and before application of any available profits for any other purpose. The coupon should be paid on the later of three business days following approval of the Company’s year-end accounts by the director(s) and the anniversary of the initial subscription for the preference shares.This is in accordance with the Company’s updated articles of association and the shareholders’ agreement that was entered into between the Company, the existing shareholders and Morgan Lloyd SIPP Trustees Limited

Put the 6750 as a debtor and when it is eventually repaid that account can be cleared.

Customer: replied 10 months ago.
Ok, next year I will pay twice the coupon (if I am successful) £13,500... will that include payment of 6750 in 2019?

No, the 13500 will be additional.

Customer: replied 10 months ago.
I would be need to run through the accounts for now. Are you still available this afternoon? Thank you then I can list all my questions for a call

I shall b in until about 2030 hrs.

Customer: replied 10 months ago.
or tomorrow as well?

Here all day.

Customer: replied 10 months ago.
great thanks so much and will be in touch again soon. :-)

Glad to be able to help.

Thank you for your support.