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Where Taxpayers and Advisers Meet

Splitting a company in 2

phildevelop
Posts: 2
Joined: Tue Jul 02, 2019 6:06 pm

Splitting a company in 2

Postby phildevelop » Tue Jul 02, 2019 6:37 pm

Hi
I own a property development company 50/50 with another director that has one valuable property that we are about to sell. After the sale it would just have the sales proceeds - less corporation tax.
Shareholders are at different stages in life and it would be simpler to go our own ways.
Our initial intentions were to liquidate the company and pay ourselves the proceeds using entrepreneurs relief but then came upon the anti phoenixing TAAR which would probably catch us out as we both have other existing property development businesses.
I am now thinking would it be simpler to split the company in 2 with the business assets being at that moment just cash and then we could each continue to use the new companies that we would each own 100% to carry out further developments. We could then choose to liquidate those companies ( using entrepreneurs relief) at a more convenient time in the future when we would each retire.
Splitting the company would seem to be straightforward as there would not be any valuation issues and cannot see that HMRC would object as tax neutral but am I missing something. Is there a simple and reasonably cheap way to accomplish this?

Thanks for any advice.

AdamS93
Posts: 233
Joined: Tue Sep 26, 2017 6:28 pm

Re: Splitting a company in 2

Postby AdamS93 » Wed Jul 03, 2019 8:15 am

Probably best you get some professional advice. You are probably talking significant amounts of money being a property development company.

There are also transactions in land and transactions in securities anti-avoidance rules that will have to be considered and planned around.

Jerome_Lane
Posts: 16
Joined: Mon Jul 22, 2019 10:13 am
Location: Camberley, Surrey
Contact:

Re: Splitting a company in 2

Postby Jerome_Lane » Mon Jul 22, 2019 10:21 am

If the company is definitely trading, then you should be okay with entrepreneur's relief. You could seek non statutory clearance from HMRC that a liquidation would not trigger anti avoidance. It appears to be for commercial purposes.

If there are commercial reasons to dividing the company's assets to new companies, again it would be advisable to seek HMRC clearance for the division.

I hope this helps if you haven't already resolved the matter.
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203

phildevelop
Posts: 2
Joined: Tue Jul 02, 2019 6:06 pm

Re: Splitting a company in 2

Postby phildevelop » Sat Aug 24, 2019 1:18 pm

Thanks for responses.
Not trying to get advise on the 'cheap' and happy to have an initial discussion with someone who specialises in this sort of issue.
Can anyone recommend a suitable advisor who has some experience in this sort of situation?

Cheers
Phil


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