JS. Tax Advisory
Restructuring
Is your business structure still fit for purpose?
As a business grows and develops, often the dynamics of the business and objectives of the shareholders also grow and develop. Reviewing your current structure to ensure it is still fit for purpose is key, and if not, restructuring can lead to tax efficiencies and also ensure your commercial and personal objectives are met.
JS. Tax Advisory can consider all aspects of restructuring your business affairs.
Incorporation
When you first started out in business, it may have made perfect sense to operate as a sole trader/partnership, perhaps because you needed all the profits personally.
However, as a sole trader/partnership you will be taxed on all profits arising, regardless of whether you still need or extract all the cash.
Now could be a perfect time to consider restructuring your business into a corporate structure, such as a company. This will allow profits you do not need personally to roll up tax efficiently at lower Corporation Tax rates and may also offer other benefits, such as the potential to ‘gift’ shares to other family members for income and Inheritance Tax planning purposes.
Corporate Reorganisations
There are many different reasons that a corporate reorganisation may be required, and there are many different forms a reorganisation can take, including, but not limited to, the following:
Demergers
You may have new services/product lines that should be held separately from others, perhaps, so they are capable of being sold separately, therefore avoiding a double layer of taxation. Or it may be that your business has clocked up substantial investments that are affecting tax reliefs for trading companies and are also exposed to trade risk. Whatever the reason, a demerger, if structured correctly, can be achieved without creating a distribution for the shareholders (that would be subject to Income Tax) or a disposal by the company (that would be subject to Corporation Tax).
Partition Demergers
Perhaps the shareholders are wanting to go their separate ways. Or maybe there are aging shareholders who are presently exposed to Inheritance Tax due to investments within the company. By allowing different parts of the business to be separately held by different shareholders, a partition demerger may be the answer. As with a standard demerger (above), if structured correctly this could be achieved with no tax charges for the shareholders and business.
Holding Company
You may have valuable assets (such as premises and cash) that you want to protect from trade risk. Or it may be that you have several different activities that you want to separate from each other, whilst still being under the same corporate group. If so, a holding company could be the answer, and if structured correctly, can be introduced with no tax charges for the shareholders or the business.
Investment Company linked to a trading group
Is there an accumulation of cash on the balance sheet and you really want to invest this? Doing so within the business may be ill-advised. This will not only have commercial ramifications but could affect the trading status of the company for certain tax reliefs. Or perhaps there are several shareholders, all with different ideas as to what surplus cash should be used for. A reorganisation to create a new separate investment company or companies (one for each shareholder) that can receive tax-free dividends from the business could be the answer. Again, if structured correctly, the reorganisation should be possible without creating any tax charges, save for Stamp Duty’. Not only will the JS.Tax Advisory team review your structure to consider if a restructuring is required, but we will also devise the full step plan and project manage this to completion, including securing HM Revenue & Customs clearance.
Not only will the JS.Tax Advisory team review your structure to consider if a restructuring is required, but we will also devise the full step plan and project manage this to completion, including securing HM Revenue & Customs clearance.