Simplifying corporate structures
Group acquisitions can result in a complex and burdensome structure, with the following issues:
- Administrative burden of day-to-day management, reducing the time available for value-added activities
- Inflated compliance costs (audit, tax and Companies House returns)
- Increased risk caused by complexity
- Value trapped in group structures and dividend blocks caused by revaluation of inter-company balances or historic negative reserves
- Tax risk/cost associated with holding multiple inter-company balances
- Legacy issues that are maintained and not resolved
- Managers at risk of censure by regulators for not mitigating risk and being effective caretakers
Often, the barriers to corporate simplification are:
- Lack of bandwidth to step back and plan the revised structure, and manage the project day-to-day through to completion
- Risk around triggering tax liabilities
- Missing in-house expertise - for example, only licenced Insolvency Practitioners can complete solvent liquidations
- Other tax/accounting/legal complexities in tidying up entities prior to elimination
Smith & Williamson overcomes these barriers to offer a flexible, integrated corporate simplification service delivering cost effective, lower risk structures and returning capital in a tax efficient way to realise value.
Project management and implementation
- Scope the project requirements (entities, phasing, target group structure and proposed timing) and build a project plan for each phase, by workstream (such as contracts, inter-company balances, assets, security releases and so on) and activity to ensure all areas are covered
- Act as project manager, focussing on dependencies and grouping activities to minimise company staff time in delivery, but reporting blockers and offering solutions
- Regular progress updates covering risks, issues and decisions, and contact with management to act as adviser, supporting as required with tax considerations, troubleshooting blockers, bottlenecks, and decision points
Tax structuring and specialist technical support
- Review of project requirements to identify and resolve any tax issues in terms of compliance, valuation and transfer of assets, clearing inter-company balances and making distributions
- Advising on optimal exit structure from a tax perspective
- Compliance support with obtaining HMRC clearances prior to rationalisation, preparing final tax returns, de-registrations and removing entities from group registrations
- Insolvency Practitioners to process solvent liquidations (i.e. Members’ Voluntary Liquidations (“MVL”)) and section 110 reconstruction schemes
- We offer a full transactional service offering to cover any specific issues for your group
We have extensive experience of successfully providing corporate simplification and post-merger integration support, within complex and regulated UK and multinational groups. Our focus is on ensuring the value enhancement behind the original acquisition rationale is achieved, and that integrations are enduring and properly embedded.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
Smith & Williamson LLP
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Smith & Williamson LLP is part of the Tilney Smith & Williamson group.
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