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My client is a trading company which is a wholly-owned subsidiary of a passive holding company.
Recently in order to incentivise two employees and directors of the trading subsidiary they have each been allotted free of charge 5% of the issued share capital in the trading subsidiary. This is by way of issuing new shares.
The appropriate return has been made under the employment related securities legislation. The valuation of the shares is not large because the company’s profits at present are modest.
The relevant elections have been signed under ITEPA 2003 s 431 and retained by me on file.
My query relates to the value shifting position here. Clearly the holding company has in effect brought about a value shift insofar as it no longer owns 100% of the trading subsidiary merely 90%. The holding company is solely owned by three individuals.
Is it necessary...
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