Fishing: Case Study 2

Background

Becoming increasingly remote in company operations, the minority shareholder of a long-established fishing company expressed his interest to exit the company and retire. The remaining company shareholders wished to progress with the company purchase of own shares, and at the same time, wind-up an existing Partnership in which the company was a Partner in order to consolidate operations.

We were approached to advise on how to tax efficiently achieve the above objectives, ensure that no more than a fair market value was paid to the exiting shareholder, as well as project manage the transactions to completion.

Our Approach

  • Negotiation of exit price with the exiting shareholder using our Corporation Finance team’s expertise in undertaking company valuations
  • In relation to the company, liaise with HMRC to gain Advance Clearance for the purchase of shares from the minority shareholder, ensuring the disposal would qualify for Capital Gains Tax treatment, and thus achieving an efficient tax position for the exiting shareholder
  • In relation to the Partnership, confirm the most efficient way to allow for the winding-up , including identification of the tax reliefs which were available
  • Preparation of valuation for Partnership and Company, including the fair market value of the fishing operation consisting of vessels, Fixed Allocation Quota units and licences along with considering the value of minority shareholders interests
  • Lead the implementation and project management of both transactions including supporting the existing accountant with cessation accounts for the partnership
  • Review all legal documentation as prepared by lawyers, to confirm these were effective from a tax perspective and achieved the desired objectives and outcomes

The Benefits to The Client

  • Comfort for all parties that a fair market value was paid for the shares acquired from the minority shareholder
  • Consideration given to all taxes including Capital Gains Tax, Income Tax, Corporation Tax, Inheritance Tax and VAT to ensure the transactions were as tax efficient as possible
  • By project managing the transactions, we allowed the shareholders to focus on the “day-job” during the COVID-19 pandemic

The Plus Factor in Action

  • We helped our client make money by structuring the transactions to ensure that the most tax efficient outcome was achieved
  • We gave our client peace of mind by project managing the transactions, ensuring all parties, including other professional advisers involved in the transaction, were aligned towards the key objectives and deliverables, allowing for the transactions to be completed in a timely manner
  • We saved our client time by ensuring that all necessary steps were fully considered, communicated and actioned.
  • We supported them now and in the future by highlighting practical steps that could be undertaken now to minimise tax liabilities in the future covering Capital Gains Tax and Inheritance Tax
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Key Contact

Graeme Allan
Chief Executive

graeme.allan@aab.uk
+44 1224 625111