Does your company structure still serve its purpose?
As your business changes, the way you organise your business may need to change too. Tax consultant NICK GILES from chartered tax advisers Page Kirk discusses the issues.
The evolution of a business can often result in changes to a company's corporate structure. A single company can become a group of companies; a company incorporated to carry out a single trade can end up carrying out multiple trades; and the involvement of shareholders can change vastly over time. Similarly, a company's structure can remain too static and not adapt to its changing circumstances.
What exactly can this mean in practice? Well, it might include redundant companies in a group structure adding to the annual compliance work and costs. Alternatively, we might be talking about companies that carry on distinctly different trades under the same company name, or shareholders who no longer share the same vision for the company's future, unable go their separate ways, as they are both heavily invested in the business they have built up together. Companies can also trade successfully over many years and build up substantial wealth, such as acquiring their trading premises or amassing significant amounts of cash, which can be put at risk if the company suffers a period of poor trading or is subject to legal action.
Fortunately, there are solutions to these problems. Redundant companies can be removed from groups. A company can be split into more than one company to carry on different trades without changing the overall ownership or, alternatively, a company can be split to allow shareholders to go in their own separate directions. Wealthy companies can create a group structure by inserting a holding company, to which it can transfer the trading company's assets, providing a separation of valuable assets from ongoing trading risks.
Unfortunately, each of these options has their own tax challenges which need to be navigated. Unwanted tax charges can arise where shareholdings change or assets are transferred from one company to another. However, with the correct planning, it is possible to take appropriate steps to achieve your desired outcome in a tax-efficient manner. Tax clearances can also be obtained from HMRC to ensure peace of mind that no nasty surprises will arise when action has been taken.
Page Kirk regularly reviews business structures and has extensive experience in advising on potential improvements that can be made and implementing those changes to achieve clients' objectives.
If you suspect that your business could be structured in a different way, or feel trapped in a way of working that is no longer right for you, please contact Page Kirk for a free, no-obligation consultation on 0115 955 5500 or email email@example.com.