Corporate Restructuring

Corporate Restructuring help businesses transition to a new phase in its lifecycle. Effective tax strategy is key in during restructuring processes, influencing shareholder value, liquidity, and overall business performance. 

Corporate restructuring can be driven by various factors such as:

• Preparing for a sale (including creating a separate company for sale);
• Following an acquisition (company or trade and assets);
• Succession planning;
• Separating different business types or investments from the trade;
• Shareholder disputes;

Whichever reason for corporate restructuring is, a strong tax strategy ensures that companies meet their business goals whether it is the creation of shareholder value, an increase in liquidity through the investment or better overall business performance. It also helps to improve corporate governance, transparency, and business succession planning, provides easier access to financing, and reduces business risk exposures.

Corporate Restructuring Tax Risks

Tax risks concerning Corporate Restructuring can be complex and varied. The process itself involves significant changes in a company’s organisational and financial structure and managing tax risks is crucial. Some of those risks include but are not limited to:

Capital Gains and Losses

Asset transfers can trigger capital gains or losses and the method of recognizing them can vary. Careful planning is necessary to optimize the tax consequences.

Loss of Tax Attributes

The Corporate restructuring may lead to the loss of certain tax attributes, such as net operating losses or tax credits when there is a change in the entity. 

Compliance with Anti-Avoidance Rules

Corporate restructuring plans should be designed to comply with anti-avoidance rules established by tax authorities to avoid penalties.

Indirect Taxes

Indirect taxes, such as VAT or GST, may be triggered as well. You need to consider indirect taxes during your Corporate restructuring to avoid unexpected liabilities.

Employment Taxes

Changes in your corporate structure may have implications for your employees when they are remunerated in the form of stock options, bonuses, or benefits. Understanding and addressing these changes early is advisable.

These risks need to be spotted early and mitigated whenever possible with an experienced advisor’s support.

Our Corporate Restructuring Support

Considering the complexity of restructuring projects and the variety of ways to go about doing it, finding the right tax advice can be difficult. At Finerva, we advise our clients on tax structuring including applying to HMRC for advance tax clearances for:

• Group reorganisation
• Demergers
• Inserting a holding company
• Hive up/down/across
• Share buyback (purchase of own shares)
• Management buyout (MBO), partial or full;
• Vendor-initiated management buyout (VIMBO)

How we work

Our Corporate restructuring team is led by Fiona Cross who has over 35 years of experience in advising companies that go who this complex stage.

As a first step, we will schedule an initial call to find out more about your background, asses the pitfall and once engaged, guide you throughout this process with clear advice, frequent communication and a proactive approach.