Company Restructuring – Holding Companies To Protect Assets

An Update on HMRC Clearances

An area that Eaves and Co has been involved in a lot recently relates to company restructuring through the use of a holding company.

Such structures are very useful where there are significant assets such as commercial property which would benefit from being protected from the risks of the trade.  This is particularly relevant at present with property valuations at record highs.

Typically, this is achieved through inserting a new holding company above the existing trading company and moving the property to the new company.  The holding company is inserted using a ‘share-for-share’ exchange.  Assuming relevant conditions are met, and importantly HMRC clearance is obtained confirming that the transactions are for commercial purposes, the shares received by the shareholders in the new company are treated as standing in the shoes of the old ones, and so there should be no CGT implications to the planning.

Over the last few years, HMRC have become much more demanding when it comes to proving that there are commercial aims to the planning.  This is despite established case law being in favour of the taxpayer.

We have dealt with a number of cases where HMRC sought to refuse clearance, or raised numerous queries before granting it.  Overall though, we have been successful in obtaining such clearances where required.

If you or your clients could benefit from this structure, Eaves and Co would be very happy to help and can handle the process from start to finish.  We would be delighted to talk to you now to see how we can help.

If you have any questions or would like Eaves and Co to help prepare your company restructure, please feel free to get in touch today.”