Business Sales & Reorganisations

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.

The Problem

Our client had plans to retire from business and close down his two companies within three years.

The companies held two letting properties which he was keen to retain ownership over as he expected them to experience significant price growth in the forthcoming years.

Our client was unsure as to the most efficient way of transferring the properties into his personal ownership and was concerned about his tax liabilities, both on the disposal of the properties and liquidation of the companies

The Solution 

We sat down with our client and formulated a plan to transfer the properties and wind-down the companies in a cost-effective and commercially beneficial way.

This involved inserting a new holding company with no trading history to which the properties could be transferred. Once all liabilities had been paid and remaining other assets had been transferred to the new company, the two businesses could then be liquidated/struck off.

We guided and supported our client throughout this process by liaising with HMRC, applying for necessary reliefs and corresponding with solicitors.

The Result 

This restructuring enabled our client to retire from the business within the desired time frame in an economical and practical way.

Going forwards, he will be able to draw down rental income from the new company as dividends.

Some of the shares in the new company may be transferred into trust in the coming months, in order to start planning for Inheritance Tax.

The Problem

A couple were undergoing the process of divorce, and a significant part their wealth was tied up in a property company owned by one of the spouses. The family court ordered that all assets belonging to the couple were to be split evenly between both parties, including the company/properties.

We were instructed by the courts to act on behalf of both parties to facilitate an equal division of the company and the properties (valued in excess of 1.7m).

The Solution 

Both parties were consulted to gain an understanding of how they viewed the business, in order to ensure that the correct tax analysis was applied from the start. We determined that the most tax efficient way to divide the business was through a capital reduction demerger.

We applied to HMRC for pre transaction clearance, to obtain agreement in advance that the demerger met certain transaction rules. Upon receipt of this, we prepared a full step by step plan for both parties on how the demerger should be facilitated.

Following this, we provided support and guidance to the parties as each step was implemented, including discussions with their respective accountants and solicitors.

The Result 

The business was partitioned into two completely separate companies. Each company was owned and controlled by a single spouse respectively, separately controlling a 50% share of the former property portfolio.

The planning and structure of the demerger meant that no capital gains tax or income tax was payable on the relevant transactions, and only a small amount of stamp duty land tax was payable overall.