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Property and company re-structure

Looking for a steer / starting point on this

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Client has asked a question which is outside my comfort zone. If anyone can give me a starter for 10, I'll happily go away and do the reading. On the other hand, if you feel I'm out of my depth and expert advice is needed, then I'll happily consider that too.

Basically, client is a trading company with the property owned by the company. To assist with the sale of the trade, client wants / is thinking about spinning the property out of the trading company into its own vehicle which he'll retain ownership of when selling the now-reduced trading company.

I'm guessing a subsidiary company ("P") could be set up and the property transferred from the trading company ("T") under some form of group relief? And presumably ownership of P could then be transferred from T itself to the shareholders of T (yes, there are minority shareholders if that is relevant) using a de-merger relief? Is that the best way of proceeding or can it all be done in one stage or should it be structured completely differently?

Many thanks in advance for any and all answers.

 

Replies (8)

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ALISK
By atleastisoundknowledgable...
05th Oct 2018 11:41

I’d go more along the lines of hiving UP (eg T is a subsidiary of P). The shareholders in T would do a share-to-share transfer to P - you’d have to look into MV and possible capital gains on the shares, I wouldn’t know.

It is the sort of thing that I’d get advise on though ... don’t know how much help this has been!

Thanks (1)
paddle steamer
By DJKL
05th Oct 2018 13:39

What does client want to happen with the money to be received from the impending sale of the business, does client want it within a corporate shell or does client want the shareholders to have proceeds as individuals?

p.s. is a business sale or a company sale envisaged, or do they not yet know?

Thanks (1)
avatar
By adam.arca
08th Oct 2018 11:53

Thank you both.

Now that you mention it, hive up does seem more "normal" than hive down but, as DJKL has surmised, this is indeed a retirement situation and the proceeds need to end up in the client's sticky mitts. My client has been trying to sell everything lock, stock & barrel but has decided that it might be an easier sell without the property attached, hence the need to spin this out of T.

Anyone got any more thoughts?

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Replying to adam.arca:
paddle steamer
By DJKL
08th Oct 2018 12:26

Possibly some form of demerger might be worth investigating, but certainly outwith my comfort zone, I would want a "Pro from Dover" to advise.

CTA 2010 s 1075 onwards might be worth reading but I strongly suspect there are lots of snags for the unwary so a pro is really recommended- there may well be other pathways.

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Replying to DJKL:
Portia profile image
By Portia Nina Levin
08th Oct 2018 12:53

CTA 2010, s 1075 isn't worth reading in this scenario. One of the requirements for an exempt demerger is a lack of intent to sell on of the demerged parts.

This is either a liquidation demerger, or, more likely, a capital reduction demerger. It should be relatively straight forward, but anybody that doesn't think so, should refer it to somebody that does.

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Replying to Portia Nina Levin:
paddle steamer
By DJKL
08th Oct 2018 13:00

And there is the pro.

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Red Leader
By Red Leader
08th Oct 2018 12:03

You've been honest and said it's outside your comfort zone. You and me both! I'd move straight to getting recommendations for an adviser to refer the client to. No point trying to double guess now what that adviser is going to say.

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By adam.arca
11th Oct 2018 15:44

Many thanks, one and all. Good to know I wasn't a million miles off with my wild guessing but, yes, I will indeed be advising the client that specialist advice is the way to go on this one.

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