Property developer growth sparks restructure
Our client commenced in business as a property developer. Over a number of years, a significant element of the profit achieved from property development was invested in property which was being let to third parties.
The investment property was purchased in group companies and was now significant enough to prevent tax reliefs available to trading groups from being available.
AAB were approached to advise on how to tax efficiently separate the trading and non-trading activities.
- Identification of the tax reliefs which were unavailable to the group’s shareholders, and the group, as a result of the significance of the non-trading activities
- Review of tax legislation to identify alternatives for tax efficiently separating the trading and non-trading activities in the group
- Presentation of alternatives and their associated tax effect to the shareholders of the group, resulting in a restructure exercise
- Leading the implementation of the restructure exercise to achieve the segregation of the trading activities in a fresh corporate structure from the other activities
- An implemented restructure delivered a separate trading group which could be sold for significantly reduced tax liability and achievement of the separation of the trading activities from other activities allowing both to operate efficiently independent of one another
- Our experience in delivering tax efficient restructure exercises allowed the business owners to focus on running the business knowing that the historic tax risks were being taken care of through the restructure
- The group were able to access valuable tax reliefs on the shares owned in the separated trading corporate structure
- Subsequent to the restructure we worked on with the property developer client to diligence the trading structure ready for sale and we are now assisting in marketing the business for disposal. On disposal the shareholders’ ultimate objective will have been achieved with an associated tax liability of 10%; 50% lower than that which would have been suffered without restructure.