PTP's Tax Tip No.34 ' Demergers

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Q. My client and his brother own a property investment company 50:50. They no longer get on very well and to stop the business suffering they want to split the company up because they have differing ideas about where the business is going. As luck would have it the company's holdings are half commercial, half residential and each portfolio is of equal value. I was talking to a professional colleague the other day who said he did a liquidation demerger ( i.e. not a statutory demerger within s.213 ICTA 1988) in very similar circumstances last year (so that each brother would end up with one company), and that following the usual Revenue clearances the only tax cost was SDLT at 0.5%. Should I proceed?

A. Be careful. Whilst it is true that a liquidation demerger transferring each portfol...

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