[Mac]

Hi Joe
Forgive me on this because I can slightly hear my old Grandma sucking eggs in the background, but buying a share in the business and working for the business are different things.

If you are going to buy a share in the business then there are a number of steps to take:

1. Determine what you are exactly buying.
If the Bar is a business then it will have paid up share capital. This will usually be divided up into shares of one kind or another. Voting shares and non voting shares, sometimes called preference shares. It would be prudent to seek a percentage of the voting shares.

2. Determine the value, captial and future income.
In my view it does not really matter much what the bar is worth now, it is only whether you will receive an adequate return on your investment and whether have some hope of receiving your investment back by the sale of your shares.

3. Tax Law
As you are a UK citizen any income accruing to you in Thailand will be taxed in the UK. There is no double taxation treaty in Thailand so tax on the business will be paid in Thailand as well. Currently income on Dividends is taxed at 10% for the first £29,500 and 32.5% after that. If you earn £29,500 after allowances already then all of your dividend income will be taxed at 32.5%. If you do not declare your foreign earnings and this is discovered then you will be fined heavily and possibly put in prison.

4. Is this a sound business venture.
Given the propensity of Bar Owners to cook the books a bit I would not consider this to be a sound business venture on a financial basis. It is not possible to pay a share dividend on unearned profits if you see what I mean, so it is unlikely that you will receive a realistic dividend return on your investment. It is also probably difficult to sell your "share" in the business at a future date because the potential buyer will be negotiating with your mate and not you.

To this end you have to consider what your motives really are. If you just want to help out your mate then perhaps you might consider a deal structure in which you purchase a nominal share in the business, get appointed as a director and then charge him "rent". The tax on this "rental" will be 40% top rate in the UK but you are allowed to offset "expenses" against the rental income - although you need to check with your tax lawyer what legitimate expenses are and the optimal structure for this deal. I would imagine that you are allowed a couple of trips a year to check up on things.

5. Liabilities
What I would consider is the potential downside of the business venture. Quite apart from the consequences of a financial loss, if you are a Director of the company and someone sues the business because they get Aids or some other horrible event occurs you will be liable. At the very least you will be in court in Thailand.

IMHO I would talk carefully with your friend and try to work out what the best option is for you - then get a good Lawyer.

Mac