Many businesses trade from the single company it started with. This might be fine, but it’s good to take a look at your business with a fresh pair of eyes occasionally to check your assets are still safeguarded and that you’ve got the right tax planning in place. 

Why reorganise?

Companies restructure for a variety of reasons. Here’s just a few examples to get you thinking:

1. Being in business can be risky. If you’ve built a strong balance sheet over time, it’s good to separate the trade from the assets. This way, no matter what happens to the trading company in the future, your assets are safeguarded.
2. If you’re thinking of making an acquisition or expanding into new markets, then it’s wise to do this through a separate company within the group or with a completely stand-alone one. If the new business fails, then it doesn’t take with it (or taint the reputation of) your core business
3. Shareholders can sometimes reach a crossroads where they’d like to go on different paths. A reorganisation can achieve this, by carving out parts of the business and creating new opportunities for shareholders to grow without the need to sell or leave.
4. Investing in your company could be an unattainable dream for most of your employees. Setting up a subsidiary could give them the opportunity they crave and prevent them from looking elsewhere. EMI schemes are also good for this.

Effective tax planning

You can get easily caught out with a number of tax charges on these transactions such as:

• income tax on the potential gain when dealing in shares
• capital gains tax liability from the share exchange
• stamp duty payable on share transactions.

The good news is that with careful planning, and providing certain conditions are met, the above can be avoided. For your complete peace of mind, we can obtain tax clearance from HMRC on the transaction before you undertake it.

Please email us at confidential@djhmittenclarke.co.uk to arrange a private call or meeting.