Our expert tax structuring advice maximises tax efficiency while providing clients with certainty of tax outcome.
What do we do?
Our team of 15 corporate tax lawyers and chartered tax advisers specialise in providing tax structuring advice to investors, shareholders and lenders in the context of private equity transactions. We provide lead tax structuring advice (and second opinions) on:
- pre-sale reorganisations of a target business;
- the sale of all or part of a target business;
- the acquisition of a target business; and
- post-acquisition group/ business rationalisation.
Pre-sale reorganisations
We act for corporates, entrepreneurs and business owners advising them on how to prepare for the sale of all or part of their business. We often work several years in advance of a potential sale to reorganise the ownership of share capital or loan capital between owners or family members (by way of gift, the use of trusts, buy back of shares, conversion of debt into equity) and/ or employees/ management teams (usually by means of the grant of share options or the issue of shares with special rights to capital on a sale).
At the same time, we can provide tax advice on how to reorganise the structure of the target group itself, its business assets, real estate interests and intellectual property (whether by demerger or partition) so that the eventual sale can be effected with maximum tax efficiency. Effective pre-sale reorganisation work can clean up tax problems that, if left, would create commercial difficulties at the point of sale – such as price chips, retentions, increased warranty and indemnity insurance costs and ultimately claims from the buyer under the terms of the sale documentation.
Selling companies and businesses
When shareholders are in the process of selling their company, we advise them on how to mitigate their tax burden by structuring the proceeds of sale to maximise available tax reliefs and where it’s possible or desirable to defer the tax charges. This may require us to correspond with HMRC ahead of the deal to obtain relevant tax clearances. We draft and negotiate all of the tax documentation, warranties and indemnities within the sale and purchase agreement to protect our clients. We liaise with the company’s accountants to prepare tax due diligence reports and prepare disclosures against the tax warranties.
Acquiring companies and businesses
We act for trade buyers, venture capitalists and private equity houses advising them on the design of the acquisition structure used in buying a target company or business. Often the acquisition structure will require the use of an acquisition “stack” of companies – comprising two or three newly-formed companies that will sit above the target and below the ultimate shareholders post-acquisition.
We use these complex acquisition structures to:
- minimise distribution treatment of acquisition finance;
- maximise the deductibility of interest on acquisition finance (even if no actual cash payments are made); and
- minimise the incidence of withholding tax from interest payments on such finance and advise on the use of any losses arising from such finance going forward.
The stack will usually require the selling shareholders and managers to accept a loan and/ or shares in the acquiring vehicle which may then be rolled-up through the stack to Topco. We advise on how to minimise the capital gains tax (CGT), employment tax and income tax, and stamp duty liabilities of the target, shareholders and managers that can arise as a result.
Post-sale corporate rationalisation
Following the acquisition, we advise on the tax consequences of transferring assets and liabilities within a corporate group. Over time, many groups become overly complex, with many dormant companies, an incoherent ownership or assets/ liabilities. Simplifying the asset/ liability ownership structure and/ or integrating the newly-acquired business into the acquirer’s group structure can trigger a variety of tax liabilities. We advise on the most tax-efficient way to move assets around the group, to reorganise liabilities and intra-group debt and to rationalise the group structure itself. Crucially we ensure that each transaction involved does not breach company law or insolvency law.
International aspects to structuring/ restructuring
Many of our tax structuring mandates will have an international element to them. The target group may have a non-UK subsidiary, branch or agency. Acquisition finance may be being sourced from a non-UK lender. Selling shareholders and/ or the buyer may be non-UK resident. Our tax structuring advice will take this international element into account, and we will liaise with local tax advisers in identifying the non-UK tax risks. We will then help you understand and manage those risks in the context of relevant double taxation treaties and legislation.
Read more about our international tax capabilities.
Who do we help?
We provide specialist tax structuring advice to all parties to a transaction, including:
- investors
- shareholders
- lenders
- corporates
- entrepreneurs
- business owners
- trade buyers
- venture capitalists
- private equity houses
- corporate group.