Home > Projects > Business Tax > Statutory Demerger & Splitting a Company

The Problem

Two brothers wished to split their business interests following a fallout of the families. The dispute became difficult and they needed someone to help them structure the demerger in a way that mitigated tax leakage as far as possible.

The Solution

We were engaged jointly by the brothers.

Our advice was provided on an independent basis to the solicitors and accountants for each brother. Firstly we set out how the split could best be achieved in essence, in a manner that was as close to tax neutral as possible.

When the parties had each agreed to the method of restructuring, we wrote to HMRC to gain their clearance to the proposed transactions.

On receipt of clearance we set out the tax implications of the transactions in full detail and the accountants and solicitors formulated a deal around the values and the tax implications affecting both sides.

The Result

The deal went ahead as suggested by PD Tax.

A statutory demerger of one of the companies. The other company being split by a S110 demerger followed by a buy-back of shares.

The only tax cost suffered by the parties was SDLT in relation to properties transferred through the statutory demerger. As a bonus, a piece of development land should receive a tax free uplift in base cost on a future sale.

Positive comments were received from the professional advisors on both sides as to the advice and level of service provided by PD Tax.