I was wondering if you could help? I have heard of the following strategy being used to maximize profits and wanted to find out if it was within the legal bounds of tax management:
Let's say a company A, with a financial tax year from march to feb, has an extremely good year and as a result, they would have to pay a significant amount of their profits to tax, money that could be well spent on growing the company. Could they Open up another company B with a tax year from jul to jun, and just before company A's tax year ends, they pay a significant portion of their profits from company A into company B which allows them to pay tax on a smaller profit level for company A, but still retaining the bulk of the funds in company B, allowing the company to use the extra time in company B's alternate tax year to utilize the funds for growth?
Is this possible and most importantly, is it legal?
Thanks and looking forward to your thoughts