We have witnessed so many different reasons as to why business owners choose to go their separate ways, from family fall outs through to changes in circumstances. Whatever the case may be, it is crucial that each party seeks advice and support from an expert tax planner to ensure this complex process utilises the right legislation to be as tax efficient as possible.
Demergers are on the rise, with increasing numbers of companies looking to refocus on core business operations, raise money from asset sales or unlock shareholder value. Yet every demerger is bespoke to individual circumstances and without careful planning could trigger significant tax liabilities for both the company and its shareholders.
One of the more complicated demergers that we have assisted with here at Champion was the break up of a business with a large property and loan investment portfolio, which required significant reorganisation. Whilst many other specialist SME accountants would have shied away from the situation, we focused our attention on minimising a potentially significant Stamp Duty Land Tax bill by utilising the legislation available to us, which also helped mitigate the Corporation Tax and Capital Gains Tax due.
Expert planning is crucial from day one. The business split negotiation may take many months but once agreed, the implementation of an ‘average’ demerger takes around three to six months to complete. It is a process that doesn’t happen overnight, and for any directors who are already thinking about demerging in the future, then speak with our group tax director, Gill Molloy, to identify the right process for you and your business from day one to ultimately minimise the potential tax due. For more information, email firstname.lastname@example.org or call our Manchester office on 0161 703 2500.