Corporate Restructuring

There are many reasons why the owners of a business might want to restructure the ownership or split the business up into its component parts:

• Split of businesses or assets for commercial risk management.
• Split of assets in anticipation of sale.
• Differing financial requirements of each trade – only certain businesses may have the ability to attract wider forms of financial support.
• Separate business units to incentivise employees of a specific business.
• Tax relief protection where trading and non-trading components exist.

Company reconstructions come in a variety of shapes and forms. The commercial objective may be to partition the business between different shareholders, or the objective may be for the ownership of a demerged business to mirror the original ownership.

There different types of demerger to consider, all of which have their own characteristics:

• Statutory Demerger – often the most straightforward to implement, but tax reliefs can be onerous, and this route cannot be used to separate non-trading activities or to split assets in anticipation of sale.
• Capital Reduction Demerger – can be used to separate trading and non-trading activities, and for pre-sale split, but requires careful planning.
• Liquidation Demerger – can be used where statutory demerger conditions are not met but are often more costly to implement as require the appointment of a liquidator.

Without detailed tax planning, significant tax liabilities can be triggered in a reconstruction for both the company and the shareholders. We will work with you to ensure that statutory tax reliefs are sought, and tax costs minimised.

Our experts are highly experienced in advising on corporate reconstructions. We will work together with you to achieve a tax efficient solution that achieves your commercial objective.