You can reorganise or separate company activities and different subsidiaries using a variety of different methods.

This series of super practical tax guides provide an outline of the tax treatment together with step guides and tax clearance templates.

Pick from the topics below.

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Topic/Case study

1. Trading company with two trading activities:

  • Separate its two trades into different companies
  • With same owners or split between existing owners

Why?

  • Potential sale of one trade
  • Separation/fallout of business partners

See Case Study 1: Tradeco: demerger of two trades

2. Trading company with an investment property or investment business:

  • Separate out activities into separate companies

Why?

  • Potential sale of trade or investment business or investment asset
  • To preserve CGT Entrepreneurs Relief (ER) or IHT Business property Relief (BPR).

See Case Study 2: Tradeco: demerger of its investment business

3. Trading company with investment subsidiary

  • Break up group and create two stand alone companies

Why?

  • Potential sale of trade, trading company or investment business
  • To preserve CGT ER or BPR

See Case Study 3: Tradeco demerger of investment subsidiary

4. Investment company with trading subsidiary:

  • Break up group and create two stand alone companies

Why?

  • Potential sale of trading company or investment business
  • To preserve CGT ER or BPR

See Case Study 4: Investco demerger of trading subsidiary

5. Management buyout

  • Form new holding company to buy out existing shareholders

For?

  • Buyout by existing shareholders or by a combination of existing shareholders and employees 

Why?

  • Borrow against assets of new subsidiary
  • Share for share exchange for existing shareholders

See Case Study 5: Management buyout: via new holdco

6. Purchase of own shares

  • A purchase, by a company of its own shares from a retiring shareholder.

For?

  • Buyout retiring or dissenting shareholder 

Why?

  • Use company funds to buy shares
  • Borrow against company assets to buy shares

See Case Study 6: POS: buyout retiring shareholder

7. Creating a group

  • Adding a new holding company, or
  • Creating new subsidiaries

Why?

  • To separate new or different activities
  • To create a holding company for a share scheme or investment relief
  • Asset protection

See Case study 7: Creating a group


 

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