Molly Rashid's Eligibility and Relief Calculation in the Sale

Q1(a)

Molly Rashid can avail the Business Dissertation Help Business Asset Disposal Relief in the form of tax at 10% on the gains on qualifying assets only when Molly meets the necessary conditions. Molly was a non-executive director from May 2007 to December 2020. This means she meets the minimum 2 years qualification of being an office holder in PS. In addition, PS is a seller of extreme sports equipment, which is not a non-trading activity. Since Molly meets all the qualification, Molly can avail the business asset disposal relief.

The gains that Molly has is difference between what Molly paid for the business asset and what Mold sold it for, which is £55,000. The relief will be calculated against this amount. There are certain other costs that Molly can apply to deduct, including the costs of buying, selling or improving the asset from the gain (fees, such as for valuing or advertising the assets; costs to improve assets; stamp duty land tax and VAT). Molly cannot deduct any interest on a loan to buy the assets; or business expenses.

Q1(b)

Molly bought the shares for £97,000 in May 2007 and sold it for £174,000. She made £55,000. As such, assets such as the share that generate a capital gain are liable to Capital Gains Tax (CGT).

At the same time, each individual is provided with a personal CGT allowance annually (6 April to 5 April). This allowance can help Molly avoid the CGT liability. The annual CGT allowance will allow Molly make gains on the investments of up to £11,000 free of tax. Any in excess of the allowance are subject to CGT.

Thus, profit is £55,000; allowance is £11,000; and so only £44,000 will be charged to CGT. Applying 10% will come to £4400 that Molly must pay as CGT.

Q2.a.

The board of directors of Joynson Haulage must comply with the Companies Act 2006, Chapter 2 that provides for allotment of shares. Sections 549, 550 and 551 provides the power to directors to allot shares. Joynson Haulage has only one class of shares, which is ordinary shares. Hence, Section 550 applies here. It provides that the directors can exercise the power of the company to allow shares or grant rights to “subscribe for or to convert any security into such shares. The exercise of such power is subject to the limit provided by the company articles. Thus, per Section 551 if the articles or a resolution allows the directors can allot the shares or grant the rights. The allotment must, therefore, be supported by a majority of the directors.

With regard to the change of name, since the company is company incorporated with the Model Articles, there must be a special resolution to that effect. Thus, all the shareholders with ordinary share holdings are entitled to attend the General Meeting and to vote on each resolution.

The Companies Act 2006, Part 13, Section 293 will apply to such special resolutions with at least 75% majority.

Q2.b.

Pass a directors’ resolution through a general meeting or a written resolution stating the number and class of shares, the allottees, the price paid.

Upon receipt of acceptances and payments, shares will be issued.

Issue the share certificate to the new shareholder.

Complete the Companies House SH01 form and filed it at the Companies House within 1 month of the allotment of shares

File at the Companies House the ordinary resolution.

If required, file any special resolution passed that altered, varied, disapplied or waived pre-emption rights within 15 days.

Amend the statutory register of members that the company maintains to that effect.

With regard to change of name

Pass a special resolution agreed upon by at least 75% of members’ votes.

A special resolution can be passed at a general meeting or in writing.

Provide a 14 days’ notice of the general meeting to all members and directors with necessary details about the meeting.

File the certified copy of the special resolution at the Companies House within 15 days of the general meeting, along with form NM01. Submit the necessary fee.

A Certificate of Incorporation on Change of Name will be provided

Notify HMRC

Q2.c.

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The CA 2006, S582(1) states that shares allotment may be paid up in money or money's worth. However, if the consideration is non-cash, it must be stated on the return of allotments sent to Companies House, which is Form SH01. The details of the consideration must be provided. The directors must act in good faith. They must be satisfied that the lorry is worth the value put on it for the purposes of the share allotment to Neil.

Q2.d. Unlike allotment of ordinary shares that requires ordinary resolution, allotting Neil non-participating preference shares will require shareholders’ special resolution.

Q3.a. They are running a general partnership firm with partners’ focus on making profits where they share in day-to-day pursuit of the business purposes and they undertake different work or parts of the business.

Each partner will be entitled to an equal share of the profits and losses), regardless of the amount of contribution.

In order to ensure Ronak is adequately remunerated, the partners must enter into an agreement to that effect.

Q3.b.

SRA, Paragraph 6.2 allows two exceptions to the prohibition on acting for more than one client. Both Ronak and Peter have a substantially common interest in relation to securing their involvement with the business. Otherwise, there will be a conflict of interest if the firm acts for both of them.

Q4.

Priority the lenders will have:

10 January 2020: fixed charge to Pacific Bank over the plant to secure a loan of £80,000, correctly registered.

22 June 2019: fixed charge to Hayling Finance plc over PSN’s main factory premises (‘the plant’) to secure a loan of £200,000. The charge has not been registered.

16 December 2018: floating charge to Northwest Finance Limited over PSN’s ‘undertaking and assets’ to secure a loan of £60,000, correctly registered.

5 May 2021: floating charge to Pacific Bank over PSN’s ‘undertaking and assets’ to secure an overdraft facility, correctly registered.