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Unwanted loss on a group restructure

This is group restructure in a wholly owned group with wrong consideration used

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Possibly more of a legal question. This is a group restructure excluded from CGT and stamp duty therefore. NAV of the companies being sold to the midco was used as consideration rather than the book value. This will create a loss in the holdco. The forms have been submitted to HMRC but we need to get it amended. I think there is a protocol to do so. Anybody come across it before? Thanks

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By Taxguy96
05th Jul 2022 19:52

For clarity, do you mean holdco has disposed of a number of subsidiaries to a Newco (Midco)? Do you know the method of transfer was it either a distribution-in-specie or as you have said forms, was it a share-exchange of some description?

What does the final group structure look like?

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By Munch
05th Jul 2022 20:22

Simply moved investments down to midco . Stock transfer with a consideration no cash. Midco was in existence already so no exchange of shares.

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Replying to Munch:
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By Taxguy96
05th Jul 2022 21:40

I may be missing something but I’m not sure what the consideration was? No cash but what, something to do with net asset value of the company?

In any case, can’t you just revalue the investment in holdco to fair value (which would be the same as pre-transfer if holdco is still the ultimate owner of everything)? Although I point out I am more of a tax advisor than an accountant.

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By Tax is always taxing
06th Jul 2022 08:34

So if I have this right, you had a parent co with (at least) two subs, it sold one of the subs to the new midco for its balance sheet value? This created a loss in holdco as the investment value was higher than the shareholders funds in the sub?

Who came up with the values and did the paperwork to HMRC, the solicitors?

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By Munch
13th Jul 2022 17:25

Over thinking this. Who did what is irrelevant. Question is can you amend the stock transfer form to the consideration it should have been. This is an intercompany restructure in 100% owned group. I got myself a free trial on lexisnexis. As expected as there is no stamp duty and it’s exempt from CGT you can amend manually and get it initialled with minutes for good order. As there is no tax implication no new stock transfer form needed. There is case law to support it. Annoyed my solicitor could not be bothered to look at this. Hardly complicated .

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