At some point in every business owner’s journey, the time comes to step away, whether for retirement, a new venture, or simply a change in lifestyle. When that time arrives, it’s important to have a clear exit strategy that reflects both your financial goals and personal wishes.
There are several ways to exit a business, including:
- Selling the business to a third party or key staff member
- Passing it on to the next generation or a family member
- Winding down the company and distributing assets
- Gifting the business, which may qualify for tax relief
At Stratos, we work closely with you to understand your goals, timescales, and priorities. We’ll assess your company’s current structure and recommend the most tax-efficient and commercially viable route for exit. We also identify any available reliefs such as Business Asset Disposal Relief (BADR), formerly Entrepreneurs’ Relief to help you benefit from as much as the proceeds as possible by minimising your tax liability in an ethical way.
We are flexible in our approach and will work with you to understand your aspirations and timescales, as well as working alongside your other advisors such as a wealth planner to support you in reaching your goals.
We will work with other professional advisors and your lawyers to support with the implementation of the sale.
Business Reorganisations
It may be that you are not yet at a point where you are ready to sell your business but instead you are considering altering the share capital in your company, reorganising a group of companies, or looking at protecting company assets by inserting a new holding company or creating a family investment company.
Reorganising a business can unlock new opportunities for growth, succession, or asset protection, as well as preparing for a future sale but it must be carefully structured to avoid unexpected tax consequences. At Stratos, we help you navigate the complexities of company reorganisations with practical, forward-thinking solutions whilst ensuring compliance with HMRC.
Why Stratos?
At Stratos, we’re committed to guiding our clients through the complex tax rules that come with exiting or restructuring a business. We understand that these moments often involve significant transition and change and we’re here to support you every step of the way. Working closely with you and your existing advisors, we’ll design a tailored solution that considers all relevant taxes and commercial implications. Our goal is to help you achieve the most efficient and effective outcome, aligned with both your business objectives and personal goals.
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Case Study
Resolving Shareholder Disputes Through Business Separation
The Challenge
Two director-shareholders of a successful trading group had a fundamental disagreement about the future direction of the business and decided to part ways. Within the group structure was a valuable commercial property, used by the main trading company and generating rental income.
While both parties agreed that one director would buy out the other, the exiting director insisted on retaining his full interest in the commercial property. However, the directors were concerned about the potential for significant tax liabilities, particularly Stamp Duty Land Tax (SDLT) and the risk of the property extraction being treated as a taxable distribution by HMRC.
The Solution
After an in-depth consultation, we designed a bespoke restructuring plan that would meet both directors’ objectives while mitigating tax exposure.
Our strategy involved demerging the group into two separate entities, one holding the trading business and the other holding the rental property. This allowed for a clean separation of interests. Once the demerger was complete, the exiting director could be bought out of the trading business while retaining his share of the property.
To protect the plan from HMRC challenge under anti-avoidance rules, we prepared a comprehensive clearance application setting out the commercial rationale behind the transaction.
The Value
HMRC granted full clearance for the restructure, confirming they would not apply anti-avoidance legislation. This gave both directors the confidence to proceed.
The restructure was implemented smoothly, achieving a clean separation without triggering unexpected tax liabilities. Most notably, the plan avoided significant SDLT charges and prevented HMRC from treating the transaction as a taxable distribution of the property.
By working closely with both directors and their legal advisors, we delivered a tax-efficient exit strategy that protected value, preserved relationships, and supported the long-term success of both parties.
FAQs
Certain clients wish to gift their business, often to family members, for no consideration and want to understand the tax implications of doing so. Stratos have worked with a number of clients in these circumstances and advised on whether Gift Hold-over relief under section 165 Taxation of Chargeable Gains Act 1992 could be available to reduce any taxes immediately due to nil and instead defer the gain until a final disposal event.
At Stratos we have dealt with a number of clients who either want to retain shares in their company or want to retain personal ownership of a property owned by the company. We work with and support our clients in formulating a plan, based on their specific needs and wants to determine the most tax efficient and economic way of achieving their goals.
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Related Services
Restructuring & Demergers
Insertion of Holding Company
Succession Planning
Employee Ownership Trusts
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