Whilst some businesses are obviously experiencing severe difficulties due to coronavirus, there are others that are managing to carry on and those who are doing very well. The situation is forcing our clients to evaluate the risks in their businesses and we’re helping them to understand how restructuring can help mitigate them.

Protecting valuable properties

One common concern that we come across is when a valuable property sits within a trading company – what happens if there is a disaster with the trade? Could the equity in the property be lost? This risk can be reduced by moving the property into a new holding company that sits above the current trading company. Of course, there are tax issues to consider including VAT and Stamp Duty Land Tax but it should be possible to do this tax-free, although clearance will be required from HMRC.

Multiple trades

Another familiar scenario is where there are two or more separate trades within a company. One trade might be saleable but the other less so or quite risky. Selling one trade from within a company can be tax-inefficient and practically more difficult, and there’s also the risk that the struggling trade could bring down the valuable trade. It can be possible to restructure this type of business in a tax-efficient manner and it’s fairly easy to move the trades into separate companies within a group. Alternatively, and with further advice, the trade could be demerged so that the shareholders own each trade separately in two new companies making a future sale a lot easier and more tax-efficient.

Group structures

In some of the other businesses that we look after, owners are considering bringing companies together within a group, possibly to enable the offsetting of tax losses going forward between the companies. Again, this can be done tax efficiently, but it does require professional advice. If a company has any value, there will be tax implications if the ownership of the shares is just transferred.

In many cases, there can be a lot of tax at stake if this type of activity is not done properly but even more cash can be lost if a business structure is not fit for purpose.

If restructuring your business is something that you should be thinking about, get in touch with me by calling 0113 297 6825 or emailing k.naylor@sagars.co.uk to find out about the most commercially appropriate and tax-efficient options that are available to you.

You can be reassured by our approach to restructuring which is to ensure that any activity makes commercial sense, whilst getting the tax right around a new structure that works for the business.

Kate Naylor
Kate Naylor
Tax Partner

Kate works with businesses and their owners on tax strategies and mitigation, looking at business and personal tax structures to achieve long term goals.

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