Readers' forum : Re-make/re-model

05 September 2017

Issue: 4614 / Categories: Forum & Feedback

Restructuring corporate position to minimise potential tax liabilities.

I have a UK trading company that owns 60% of the share capital in two other trading companies. The remaining 40% is held by individuals who are not shareholders in the holding company which is owned by four separate individuals.

They would like to restructure the corporate position so that the shares owned by the holding company (60% in each subsidiary) are transferred to them individually pro rata to their shareholdings. After the transfers the group structure will have disappeared and there will be three separate companies – albeit associated.

I am concerned that reliefs available under the demerger/reorganisation provisions will not apply since I do not have a 75% group before the transaction and the main reason for the restructure is so the two former subsidiaries can be sold in the future with the individuals receiving value and claiming entrepreneurs’ relief.

The old statement of practice 5/85 considers share-for-share...

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