Ownership of assets / me or company?

lassox4

I am the director and owner of an online book publishing company. I hire freelance writers on websites (ex. Upwork.com) to write books that I later publish through Amazons KDP program. In the contract between me and the freelance writer it is stated that I will own the copyrights to the book (see below excerpt). But since I started the company all transactions have been going through the company's bank account. That includes all royalty income from my books as well as all payments to the freelance writers. I now realize that I would rather go back to operating as a sole trader as having a limited company comes with a lot of extra work. But if I was to close the company i'm afraid that there would be complications in terms of who owns the books.

Are the books assets of the company or me as a sole trader?

If not assets of the company, how will I present this in my accounting for my upcoming annual return (B1) and Corporation tax (CT1)?

This is an excerpt from the contract.
"This agreement (“Agreement”) is between {my name}, henceforth referred to as “Author,” and {freelance writers name}, henceforth referred to as “Ghostwriter,”

Copyrights. Author will own the Work, including any copyrights and sale or distribution rights.

Credit. Credit for the Work will {be given to the Author and the Author only}. "

I would be most grateful for any advice at all.

Thanks!

antoinolachtnai

Unless you sell up to HarperCollins, this is more of a theoretical problem than anything else. The way this is dealt with in big companies is with assignments (transferring the copyright essentially) and licences (allowing the copyright to be used for some limited timeframe or purpose whilst retaining ownership).

I would say that the books are not assets of the company, rather your assets and you have effectively licensed them to the company. Even if the company somehow owns the books, you can always buy them back from the company as you liquidate it (assuming the company has paid all its creditors).

lassox4

Thanks for your answer! If the books were owned by the company and I decided to buy them back do you think I would have to pay some tax on that transaction?

Graham

antoinolachtnai wrote: »

I would say that the books are not assets of the company, rather your assets and you have effectively licensed them to the company. Even if the company somehow owns the books, you can always buy them back from the company as you liquidate it (assuming the company has paid all its creditors).

How would that work if the company had paid for the writing of the books?

Would there be a tax liability for the OP if the company had essentially paid for books to be written for him personally?

I think you're definitely heading into the 'go talk to an accountant' territory.

antoinolachtnai

lassox4 wrote: »

Thanks for your answer! If the books were owned by the company and I decided to buy them back do you think I would have to pay some tax on that transaction?

This is a very complicated issue, but the short answer is that no, if the liquidation is properly structured there really shouldn't be any very significant tax issue here.

I have no idea of the rest of your tax arrangements so I really can't say anything more. You really do need some specific advice to sort this out. But it should be fine.

lassox4

Thanks a million for your feedback Graham and antoinolachtnai. Much appreciated!

pedroeibar1

I agree with Graham - you need professional advice
IMO it is a theoretical question only if all the creditors are being paid in full on liquidation of the company. Were I a creditor and at risk of being unpaid, I would argue that the company was the beneficial owner and I believe that I’d have a good case as all payments are processed through the company’s bank account. I also believe that there would be tax issues on the assignment/transfer of copyright rights. It boils down to how much money is involved, how a liquidator would view it and if it hits the radar at Revenue.