Tax advice on complex group reorganisations for larger private groups

A larger private group rarely has one problem. It has several companies, property alongside trade, shareholders at different stages of life, lenders with security over some assets, and often a sale, a succession or an investment somewhere on the horizon. A reorganisation touches all of it at once.

ASWATAX advises owners and boards of private groups on demergers, reconstructions, pre-sale reorganisations and succession splits. We work quietly, with a small senior team, and we design the plan so that each step supports the next.

Who this is for

• Owners and boards of private groups with several companies, with value of £10m or more.
• Groups that hold property and a trade together, where a buyer, a lender or the next generation will want them apart.
• Families whose branches want to go separate ways without selling to a third party.
• Shareholders preparing for a sale, an investment or a succession, who want the group in order first.
• Advisers acting for a group of this kind, who want a specialist tax team alongside them.

What we handle

• Demergers. Splitting one company or group into two or more, by capital reduction, statutory demerger or liquidation, depending on which fits. See Capital Reduction Demerger.
• Reconstructions and share exchanges. Placing a new holding company above a group, merging companies, or moving a business within a group. See Corporate Restructuring and Holding Company.
• Pre-sale reorganisations. Separating property and surplus cash from the trade, protecting reliefs and presenting a clean business to a buyer. See Exit Planning and Transaction Tax.
• Succession splits. Dividing a group between family branches or partners, with the inheritance tax position of each considered. See Succession and Retirement Planning.
• HMRC clearance. Preparing and submitting statutory clearance applications, and answering HMRC's questions.
• The edges. Stamp duty, SDLT, VAT, employee and contract questions, and the accounting entries, coordinated with the right specialists.

What we look at in a group of this size

1. The commercial reason. Under the main purpose test, a genuine commercial case is the foundation of the relief.
2. Trading status. Where cash and investments sit, and whether the 20% non-trading indicator HMRC uses for Business Asset Disposal Relief and the substantial shareholding exemption is at risk.
3. Property. SDLT group relief and its three-year withdrawal rule, valuations, and the position of the lender.
4. Shareholders. Who is in, who is out, minority holders, and whether everyone is treated on the same terms.
5. Reserves and solvency. Whether the route chosen has what it needs, such as distributable reserves for a capital reduction.
6. Stamp duty. The 0.5% charge on shares, and whether the conditions for relief can be met.
7. What comes next. A sale, an investment or a handover, and the holding periods the next step needs.

How an engagement runs

1. A confidential first conversation. We listen first. We ask what you want the group to look like in three years, and what stands in the way. If you prefer, we start with a hypothetical.

2. Scope. We agree in writing what we will look at, who will be involved and the timetable.

3. The step plan. The senior team compares the routes, tests each step against the next and we design the step plan. You receive the step plan in writing, with the tax at each stage, the risks and the reasons for the order.

4. Clearance first. Where it is worth doing, we prepare and submit the HMRC clearance application before any step is taken, and deal with HMRC's questions. If the answer changes the step plan, it changes while it is still only a plan.

5. Implementation. Our in-house legal team can prepare and execute the documents. If you prefer your own law firm, we brief them and review their drafts for tax. We work with your bankers on consents and with your auditors on the accounting entries, to one shared timetable.

6. After completion. We make sure the filings are done and the reliefs are claimed, and we give your accountant a clear picture of how to maintain the new structure.

Every plan is reviewed by a Chartered Tax Adviser, and you work with the same senior team from the first conversation to completion. We reply the same working day.

Working with your other advisers

We do not replace your lawyers, bankers, auditors or accountants. We are the tax specialists in the room.

• Lawyers. Ours or yours. Where you keep your own firm, we say what the documents must achieve and check them before they are signed.
• Bankers and lenders. We identify the points where consent or a release of security is likely, early enough to build into the timetable.
• Auditors and accountants. We provide the step plan we design and the accounting entries so the books match the tax analysis. See our article on accounting entries in demergers.
• Corporate finance advisers. Where a sale is planned, we align the reorganisation with the buyer's process and the tax terms of the sale agreement.

Proof

We have advised 300+ clients, restructured £250m+ of businesses in groups of up to £50m, and obtained 100% of the HMRC clearances we have applied for, across 100+ applications. We are Rated 5.0 on Google.

These case studies show the kind of work involved. Each is anonymised, and each depends on its own facts.

• Separating property from a £35m construction group ahead of a sale. A holding company was inserted, a capital reduction demerger separated the property, clearances were granted before any step, and SDLT relief was secured.
• Demerger of a £6m property investment company. Two brothers divided the company between their families, with advance clearance, VAT and legal specialists involved, and a 40-page advisory report.
• A capital reduction demerger that saved over £800,000 of tax. A family-run travel agency in London, with HMRC clearance central to the plan.
• Six education companies under one holding company. Overlapping shareholders, two companies kept outside the group for strategic reasons, and a sale in view.
• A family-owned firm sold to a private equity buyer. A £5m to £20m deal combining cash, loan notes, an earn-out and a rollover, with property separated first.

Past outcomes do not guarantee future ones. The tax result always depends on the facts, the conditions being met and HMRC's view.

Confidentiality

Discretion is part of the service. We keep your information confidential and restrict it to the people who need it. We keep matters separate from other clients, and we process personal data under UK GDPR. We agree at the start who may speak to whom, and in what order. If you want further safeguards, we will discuss them in the first conversation.

Why ASWATAX

We are a small, specialist firm of Chartered Tax Advisers. You are not passed between departments, and the people you meet at the start are the people doing the work. We start from the commercial outcome and work back to the route. We will tell you plainly if a simpler step, or doing nothing, is the better advice.

For the technical detail of demergers, see our specialist practice at demergertax.co.uk, and for holding companies, holding-company.co.uk.

Talk to us

Most of our larger matters begin by introduction from a lawyer, banker or other adviser. You are equally welcome to contact us directly. Arrange a confidential first conversation, or write to taxadvisory@aswatax.co.uk.