UK COMPANY BUYS OTHER COMPANY'S SHARES

[SUSSEX BUSINESS]

I wonder if anyone can advice me
One of my clients (Ltd company) has bought a 100% shares in other company.
This is first time I have this type of transaction.
Shares has been bought for 20,000£
I know that I need to take into account couple of things.
Can anyone tell me what is general accounting rule for this type of transaction ?
If company paid directly from business bank account can I treat it like General Purchase or Investments ??
Thanks for any reply

 

[Oak & Berry]

You need to take under consideration various things.
What was the purpose of buying shares?
Is it the Ltd company that is taking over antoher Ltd company? Or you bought stock as an investment?
In most cases you will treat it as an investment.You should also be aware of tax implications.
If one company owns shares in another company, the two companies become associated companies for Corporation Tax purposes.
If one company owns all or most of the shares in other company, the copany owned becomes a subsidiary. This means that you will need to have accounts prepared for both companies in the normal way, but you might also be required to prepare consolidated group accounts.
Be also aware of tax when selling those shares. You may have to pay Capital Gains Tax.What is more you should pay Stamp Duty on the shares bought.
More info here: https://www.gov.uk/tax-buy-shares/use-a-stock-transfer-form

Regards