Share buy backs & Termination payments

Discussion in 'Askaboutbusiness' started by Gunsmas, Jan 7, 2017.

  1. Gunsmas

    Gunsmas New Member

    Hi Folks,
    Doing some research at the moment for an academic tax project - I understand both the above strategies of wealth extraction pre retirement but am confused as to a few administrative areas, so help would be greatly appreciated!

    Share buy backs;
    Typical example - Husband and Wife ready to hand over to a child. Benefit of the trade and other tests met. Husband and wife hold 50% each in the company and want to extract some cash using a share buyback before gifting the shares to the child and want the CGT treatment for the disposal.

    How can you get around the 30% connection test in this example?

    If they sell 90% of their shareholding, I presume the remaining 10% value is based on the value of the remaining assets?
    How can you gift shares to the child using the buyback strategy as there will always be a 30% connection left between the spouses and the company after the buyback where both are substantial shareholders. - no difficulty where 99% / 1% shareholdings respectively. Can the buyback and subsequent gifting of shares be deemed to take place simultaneously?

    Termination payments;

    Can a shareholder/director get a termination payment but still hold their shares and respective voting powers?
    In a case like the above, if they both resigned and received term payments to extract cash, the company would have no director - so, would you appoint the son as director firstly, then spouses resign, then they gift shares to the son with the benefit of Retirement Relief and CAT business relief for the son? It would then be a single member company - would company articles have to change to allow this?

    Apologies if I am waffling but I am stuck on these processes.