Best way to split/remove/transfer Company Assets

by **RChapman** on Thu Aug 26, 2010 11:54 am

Hi,

Need some help.

Situation is, Company A includes a trade worth 400k and property worth 2m.An Investor wants to buy 49% of trade but none of the property.

What is the best way (most tax efficient) for the owner of Company A to split the Company into perhaps one Company that holds the property and is owned 100% by him and another that holds the trade which is owned 49% Investor & 51% him.

The company holding the property will receive rent from the trade company but it is the intention to sell the property within the next 3/5 years.

Initial problems I see are the split of the company assets and potential CGT exposure. The tax exposure on the sale of the 49% and finally the future tax exposure on disposal of the property.

Any comments or suggestions would be most helpful.

by **Generix** on Thu Aug 26, 2010 12:48 pm

Would assume TOGC.

by **RChapman** on Thu Aug 26, 2010 1:02 pm

Generix wrote:Would assume TOGC.

Hi Generix, Could you explain a little more. Sorry not sure how this relates. I thought this was more to do with the VAT?

by **Generix** on Thu Aug 26, 2010 4:19 pm

RChapman wrote:
Generix wrote:Would assume TOGC.

Hi Generix, Could you explain a little more. Sorry not sure how this relates. I thought this was more to do with the VAT?

I understand the same logic applies to business tax etc, i.e. the liab's/tax values/cgt etc is all move accross without bringing an immed cash cost.

I was hoping one of the direct tax experts would pipe in...maybe they're busy today

by **James Price** on Tue Aug 31, 2010 1:00 pm

Given the numbers you are talking about here, I would think a reconstruction under s110 Insolvency Act might fit the bill. OldCo is liquidated with relevant assets being distributed into NewTradingCo and NewPropertyCo.

by **Incredulum** on Wed Sep 01, 2010 2:54 pm

James - does a s110 reconstruction not give a risk of a degrouping charge if they wish to sell the property (corporate deal) within 3-5 years?

OP this is very difficult to answer without a full picture of the company's assets, liabilities and various values of assets. You will need some very good professional help in order to make sure that this does not go pear-shaped, leaving you with tax liabilities left, right and centre.

by **James Price** on Thu Sep 02, 2010 11:21 am

No idea whether a degrouping charge will arise as we don't know what the NGNL value would be now, or what it will sell for. As per my earlier post I said it might fit the bill.

I agree with you that in a case such as this the OP needs to consult fully with an expert rather than using internet forums.