The choice between the divisionalised and group company structure during the planning of tax needs careful consideration once set up limited company companies house. The general principles for this choice will be discuss in this blog along with ethics or the fundamental principles that are required to be followed by a person being a part of a company, business or firm in the formation of UK.
Group Structure or Single Divisionalised Company
In certain scenarios, after ltd company formation UK its operation can be perform through a single divisionalised company or through a group company structure.
The names of the implications while setting up a trading group in the formation of UK are mentioned below:
A number of drawbacks exist as far as the group structure is concerned, whose consideration should be done, specifically when the sale of subsidiaries or the parent companies is to be made. In the case where the parent company is sold out, the group would either sell the group and then purchase back the desired subsidiaries or sell the assets or go for the reconstruction of the group that would need clearances of tax and would cause delays.
In the case where a subsidiary is sold out, this could create a capital gain although there may be an availability of relief for substantial shareholdings.
The primary benefit of a divisional structure is the fact that the total amount of the small profits tax band will be available instead of being divided among all companies that are under one common control.
The other benefits include:
On the contrary, mentioned below are some of the disadvantages of a divisional structure:
Keeping in view the advantages and disadvantages of the divisional structure and the group company structure, the appropriate choice between these two should be made.
Ethics and the Fundamental Principles
After ltd company formation UK or set up limited company companies house, then there are certain ethical and fundamental principles to be followed by the members as a part of the firm. The members should comply with the regulatory and statutory requirements. There are certain set of code of ethics and conduct that is expected to be follow by members of a company. This section covers the fundamental principles and explains a framework for the application of these principles. As a normal manner, the responsibility of a member will be to an employer or to a client but there can exist scenarios where the action of a member may be required in the interest of public.
All of the professional behavior of a member should be underlined by the fundamental principles of ethics.
These fundamental principles include:
A situation may be faced by the member in which he has a particular threat to compliance with the fundamental principles. There are many possible circumstances and instead of trying to specify how every scenario should be dealt with, a conceptual framework is provided that needs the members to make an identification, addressing and evaluation of such threats. The members should apply the precautions to eliminate the threat or reduce it to a level that is acceptable unless an identified threat is clearly insignificant, so that there is no compromise in the compliance of the fundamental principles.
Threats to Members
As soon as the member gets to know or is expected to know about any threat or its existence, it is his duty to make its evaluation. Both the qualitative and quantitative factors should be taken into consideration.
The following categories cover most of the threats to compliance with the fundamental principles:
Preventions for the Elimination of Threats
If the implementation of appropriate preventions cannot be done by a member, then he should discontinue or refuse the particular professional service involved, or resign from the client where required.
There are two main categories of the safeguards that may reduce or finish the threats to a level which is acceptable, as mentioned below:
Resolution of Ethical Conflict
There may be a scenario where specific situation leads to a conflict in applying the fundamental principles.
While starting the process of either a formal or informal conflict, five factors should be considered by a member which include:
After taking into consideration the above issues, the determination of an appropriate course of action can be done that resolves the conflict with some or all of the five fundamental principles. Still, if the matter remains unresolved, the consultation should be done by the member with the appropriate persons within the firm who may be asked for help in acquiring a resolution.
With or within an organization, when a matter involves a conflict, the consideration of consulting with those charged with the governance of the organization should also be done.
It is advised to the member that he should make a documentation of the issue that involves the details of any decisions taken or any discussions taken place, related to that issue.
If the resolving of a prominent conflict cannot be done, it may be desired by a member that he acquires the personal advice from legal advisors, in order to acquire guidance on legal and ethical issues without having the need of breaching confidentiality.
After trying all the solutions and exhausting all relevant possibilities, if the case occurs that the conflict of ethics is still not resolved, then wherever it is possible, the member should take special care that he refuses his association with the matter that caused the conflict.
In such circumstances, it may be determined by the member, that it is significant to make a withdrawal from the team of engagement or from specific assignment, or he may also choose to give resignation altogether from the firm or from that particular engagement.
When to disclose information and different factors to be consider will disclosing?
The disclosing of information may be done by a member if the law has permitted the disclosure and the employer or the client has authorized it; if the disclosure in needed by the law such as under the legislation of anti-money laundering; and finally it can be disclosed where there is professional right or duty to make the disclosure, when allowed by the law, for example under the review of quality.
The members should consider the following points when making a decision of whether to disclose the information or not:
The information should only be disclosed under the conditions above and not otherwise.