Business restructuring | Protecting your assets
The situation
A very profitable company operating in a niche market with one major customer had built up a large cash balance.
As the business operated from rented accommodation the owners felt it was the right time to use the cash to acquire their own premises.
Challenge
Holding all assets in one company operating an unpredictable trade was risky.
The aim was to extract the cash from the company without triggering tax liabilities and to create a structure which offered protection in terms of the holding of the property going forward.
Our solution
We created a new holding company and formed a group structure above the existing trading company.
Cash could then flow between companies without incurring tax liabilities which allowed the holding company to purchase the premises on behalf of the trading company.
Outcome
Tax clearances and stamp duty relief were obtained in respect of the new share structure which mirrored the structure in the existing trading company.
The required structure was established with no tax cost and the use of the cash reduced the risk that HMRC could argue that the company was no longer a trading company.
"In a broad sense, the goal of restructuring is to separate assets into distinct entities to create simple, separate structures that improve transparency and limit risk."
How restructuring your business can help you protect your assets