New Year's resolution - strategic change

The start of each new year is commonly a time when business owners decide that change is required. Whether these changes are driven by the changing aspects within the business, or external pressures, will depend upon each businesses unique circumstances. But there is nothing like a break from the business to give owners the time to have perspective on it! (there is often a further surge in enquiries in early September once everyone has had their summer holiday….).

One area of adjustment to business centres around the businesses structure – if other strategic objectives are to be met then the structure of the business needs to be fit to meet the future needs of the business and its stakeholders rather than just being a result of the past. So if you have a limited company, or group of companies, and are not convinced that the structure will work for you then now is the time to address it. Here are three examples of recent assignments:

The Commercial Divorce

Charles and Nigella had a successful property company for many years, which accumulated a number of desirable assets within it. Following a very public disagreement they decided that each party should go their own way, whilst wishing to plan their tax affairs to avoid triggering taxes wherever legitimately possible. Following consideration of all of the possible routes, a restructuring process was utilised which created two new companies, each owned solely by one party, which each held 50% of the net assets of the previous company.  In this way they could each go their own way without interference from the other. Advice was also provided by specialists on the control of overhead costs, in order that their businesses were more profitable in the future!

The Risk Down

Jeremy, with his colleagues Richard and James, owns and manages a very successful transport related business. Over a number of years the business bought and paid for a number of properties from which it operated, such that the balance sheet now has a very healthy positive balance on it. The vast majority of that value is property related, as the transport assets can be subject to sudden depreciation! Following detailed strategic and taxation planning the existing limited company was divided into two – such that they now own a property company jointly, and a transport company jointly. The change process necessitated liaison with the businesses bankers to ensure that they were comfortable with the structure going forward. But they are now in the position where any sudden depreciation within the transport business will not affect the property assets.

The Family Jewel

Elizabeth, after many years of hard work, has recently transferred the trade of the family business from her company to one owned by Charles; her son. However the premises, a desirable property in Windsor, remains within her limited company. Elizabeth’s advisors have indicated that she should transfer the property into her own name as this is the right structure for the future. A number of possible routes to achieving this strategic aim were reviewed, and one was selected where Stamp Duty Land Tax (SDLT) was not chargeable due to exemptions contained within legislation.  So Elizabeth now controls the property in her own name following a cost effective transfer!                                                                                                  

All aspects of corporate restructuring are complex and require expert business, financial, tax and often legal advice. We can help you create the structure that is right for you. Should you have any questions please do not hesitate to contact me.

Mark Ranson, Restructuring Partner

 

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