How can a Dormant company receive a premium?

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    #16
    Originally posted by Gordon999 View Post
    luketj

    Are you a director or shareholder of this dormant company ?
    Yes, a director.

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      #17
      Here is chapter and verse:

      Section 1169 of the Companies Act 2006

      Section 386 of the Companies Act 2006

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        #18
        Section 38 makes no reference to market value when not at arms length, and doesn't state whether that section is subject to section 17.

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          #19
          Originally posted by luketj View Post
          Section 38 makes no reference to market value when not at arms length, and doesn't state whether that section is subject to section 17.
          What does the start of s17 say? And you can look at other places for clues as to what this means - e.g. s144ZA and s149A.

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            #20
            It says section 17 is subject. So are you saying that when it comes to the calculation of the loss made on acquisition, section 17 does not apply because it is subject to section 38?

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              #21
              Originally posted by luketj View Post
              So are you saying that when it comes to the calculation of the loss made on acquisition, section 17 does not apply because it is subject to section 38?
              Absolutely not.

              Section 17(1) says "... a person's acquisition or disposal of an asset shall for the purposes of this Act be deemed to be for a consideration equal to the market value of the asset... ". So the starting point is it applies to all parts of the TCGA.

              The bit before that though says "Subject to the provisions of this Act," so that means some specific provision in the TCGA can override this general rule.

              As I said, there are examples of this is s144ZA and s149A.

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                #22
                So how does one know what provisions of the act section 17 is subject to? It doesn't say "some provisions" or "certain provisions", but "the provisions of this act". How can I know if section 38 is one of those provisions or not?

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                  #23
                  Originally posted by luketj View Post
                  So how does one know what provisions of the act section 17 is subject to? It doesn't say "some provisions" or "certain provisions", but "the provisions of this act". How can I know if section 38 is one of those provisions or not?
                  Have you looked at the two examples I gave you? They make it very clear.

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                    #24
                    I tried but I cannot find them. I cant see any mention of ZA.

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                      #25
                      Originally posted by luketj View Post
                      I tried but I cannot find them. I cant see any mention of ZA.
                      Have a look at s158 Finance Act 2003.

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                        #26
                        The section specifically says "section 17 applies", so it doesn't answer my question "So how does one know what provisions of the act section 17 is subject to?"
                        I can see you believe that section 17 will apply to my case, but on what grounds can we say that section 38 is subject to section 17? Because they contradict one another.

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                          #27
                          There is no need to get bogged down in tax legislation to determine whether a company is dormant. The sections quoted in post 17 are what determines whether a company is dormant.

                          To summarise, if you do anything other than the bare minimum needed to keep the company on the register the company is not dormant. There is no insignificant transaction exemption.

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                            #28
                            Originally posted by luketj View Post
                            The section specifically says "section 17 applies", so it doesn't answer my question "So how does one know what provisions of the act section 17 is subject to?"
                            I can see you believe that section 17 will apply to my case, but on what grounds can we say that section 38 is subject to section 17? Because they contradict one another.
                            I think you need to re-read it. Section 144ZA(2) and (3) between them disapply s17 four times. There is nothing in s38 that says anything like that.

                            And did you find s149A? It came in with Finance Act 1993?

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                              #29
                              Originally posted by Lawcruncher View Post
                              There is no need to get bogged down in tax legislation to determine whether a company is dormant. The sections quoted in post 17 are what determines whether a company is dormant.
                              Completely agree. But I'm guessing that luketj's concern is more around the tax.

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                                #30
                                Yes, the subject has broadened slightly from the original question.
                                Right, so you are saying a section must disapply section 17 for it not to be subject to it. Do you know any legal cases where section 17 dominated over section 38?
                                The reason I'm asking is because it makes a big difference to the tax implications of my situation. If I can be sure that section 17 dominates over section 38 then there is a greater likelihood that my tax situation will be market value - market value = nil, which I will rejoice greatly over!

                                Thanks for your time.

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