Shareholder exit strategy

The shareholder exit frame work can be applied when one or more owners of a business wish to leave the business either to retire or possibly as a result of a shareholder dispute.

Traditional Considerations

Ordinarily when the ownership of a business changes there a number of tax considerations both present and future. These can be

  • Capital gains tax
  • Corporation Tax
  • V.A.T
  • Stamp Duty and Stamp Duty Land Tax
  • Income tax
  • Inheritance tax

Consideration needs to be given to a number of issues here:

  • Is the business being sold in direct ownership of the shareholders? If not then it may be appropriate to consider a pre-sale reconstruction to reduce the incidence of taxation and give the shareholders the opportunity to share directly in the proceeds of the sale.
  • Are there any previous transactions that may trigger a tax liability on sale e.g. a previous transfer of assets between two group companies
  • Do the vending shareholders qualify for CGT treatment?  If not can this be rectified.
  • Do the vending shareholders qualify for Business Asset Disposal Relief or Investor relief?  If not how can this be remedied?
  • Will HMRC give tax clearances for the proposed transactions?

For further information please contact us