Pre-sale restructuring · £20m–£50m
Demerging property from a construction group before a sale
How we inserted a holding company and used a capital reduction demerger to separate property from a £20m–£50m construction group, with HMRC clearances and SDLT relief.
The client
The UK shareholders of a property and construction group worth between £20m and £50m, preparing the business for a sale.
The challenge
The group held valuable property alongside its trading business. A buyer would want the trading business, not the property. The family wanted to keep the property.
Separating the two can trigger capital gains tax, corporation tax and stamp duty land tax if it's done the wrong way.
What we did
- Inserted a new holding company through a share-for-share exchange.
- Separated the property from the trading business through a capital reduction demerger.
- Obtained HMRC clearances under section 138 TCGA 1992 and section 701 ITA 2007 before implementing anything.
- Secured stamp duty land tax relief on the property transfers.
The outcome
- The property was separated from the trading business without a tax charge on the reorganisation.
- Stamp duty land tax relief was secured on the property transfers.
- All HMRC clearances were granted before implementation.
- The family kept the property, and the trading company was left clean and ready to sell.
