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A practical look at liquidation demergers
KEY POINTS
- A liquidation demerger is a non-statutory demerger.
- Seeking HMRC clearance brings certainty.
- Degrouping charges may be a problem.
- VAT is a consideration.
- Stamp duty may be mitigated by tax relief.
In the current economic climate there is a general reluctance to make acquisitions and on the flipside a disinclination to sell at a price that may be considered to be at an undervalue. Instead shareholders are reviewing their existing businesses with a view to streamlining activities to ensure that current operations function more efficiently with cash savings being the ultimate result.
A demerger can facilitate the division of a group’s activities so that where a group has distinct business streams these can be run on a standalone basis which can...
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