We assisted a company allocate their trading activities into two separate companies so as to reduce the exposure of each company to the other company’s risks without producing adverse tax consequences.

Client Challenge

Mr X owned a company ‘A Ltd’ which itself owned a company ‘B Ltd’. Both companies operate in high risk sectors. A Ltd undertakes all types of civil engineering and construction projects whilst B Ltd trades as a house builder. As a result of the company structure there was an inherent risk to each company operationally and financially. The directors of the companies wished to separate them into distinct entities in order to reduce the exposure of each company to the other’s risks without producing adverse tax consequences.

How did Bedrock help?

We proposed and advised on a statutory demerger of the companies to separate the two entities, resulting in Mr X owning 100% of both companies. We prepared and submitted an application for clearance on the proposed transaction, successfully obtaining HMRC clearance to ensure capital gains tax, income tax and stamp duty did not arise on the transaction.

Business impact and benefits

Following the demerger, each company can now trade independently and make commercial decisions without needing to consider the impact on the other entity.

If you’d like to discuss whether this approach is appropriate for your business get in touch today and speak to one of our tax experts.


Call us on 0115 778 8533 for a free consultation.

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