{"id":1086,"date":"2022-12-06T10:33:09","date_gmt":"2022-12-06T10:33:09","guid":{"rendered":"https:\/\/ctt-group.co.uk\/accountancy\/?p=1086"},"modified":"2022-12-06T10:33:11","modified_gmt":"2022-12-06T10:33:11","slug":"case-study-ctt-groups-multidisciplinary-high-level-consultancy-saves-business-owner-millions-in-complex-sale","status":"publish","type":"post","link":"https:\/\/ctt-group.co.uk\/accountancy\/case-study-ctt-groups-multidisciplinary-high-level-consultancy-saves-business-owner-millions-in-complex-sale\/","title":{"rendered":"Case Study: CTT Group\u2019s multidisciplinary, high-level consultancy saves business owner millions in complex sale"},"content":{"rendered":"
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Many of us have experienced the pains of a house sale. Trying to get all of the involved parties co-ordinated for a smooth transition is like trying to force the stars to align. Multiply the difficulty by 5 for a business sale and then by another 10 when only part of the business is being sold.<\/p>\n

Plus, for the individuals selling the company, there are substantial tax liabilities to consider. The whole situation is migraine-inducing to say the least!<\/p>\n

Luckily for our client, CTT Group are a multidisciplinary advice service with experts spanning a range of specialisms. This means that regardless of the level of complexity involved, we have the knowledge and experience to find the best solution.
\n
\nThe Problem<\/strong>
\nThe client in question came to us having already agreed a sale of his business for around \u00a310m. Although the company owned the premises it traded from, the property was not included in the sale.<\/p>\n

This caused several issues for the client.<\/p>\n

Firstly, he was limited to selling only the business\u2019s goodwill and assets, and could not sell the shares in the company. Unfortunately, selling the trade of the business was not a practical solution as any agreements or contracts would need to be moved. <\/p>\n

Secondly, the subsequent tax liability of this scenario would have been up to \u00a32m and funds generated from the sale would have been locked in the company.<\/p>\n

On top of that, one of the shareholders wished to re-invest some of his proceeds for shares in the acquiring company, something that simply couldn\u2019t be done in the current format.
\nIt was a knot that required specialist untangling.
\n
\nThe Solution<\/strong><\/p>\n

CTT Private Client already acted for the shareholders and introduced them to CTT Accountancy to advise on the proposed sale and find a way of selling the shares in the company whilst minimising tax and extracting the property. The combined knowledge of both teams allowed us to propose a solution that fit the client\u2019s interests as a business owner and as an individual planning his estate.<\/p>\n

The answer was to undertake a capital reduction demerger, which meant that the property could be extracted into a separate entity with no adverse tax implications. <\/p>\n

This resolved two issues to start with: <\/p>\n

\u2022 Corporation tax (circa \u00a3930k) and stamp duty (circa \u00a3520k) would not be incurred on the transfer of the property<\/p>\n

\u2022 Shares in the trading company could now be included in the business sale.<\/p>\n

Having untangled the shares and saved almost \u00a31.5m (just to begin with), the next step was to apply to HMRC for clearance for the proposed transaction. If declined, this can add a significant amount of time to what is already a time exhaustive process for everyone involved. Extensive work and attention to detail is required at this stage to minimise risk of rejection. Luckily for the client, this was not our first rodeo; our application was approved first time with no issues.<\/p>\n

With HMRC clearance secured, our Accountancy and Private Client teams decided to reassess the shareholdings before implementing the company\u2019s restructure. We reviewed the shareholdings from a tax perspective to ensure that any inheritance tax (IHT) or capital gains tax (CGT) liabilities could be mitigated for the shareholders.<\/p>\n

The timing of the next steps to be taken was crucial. We arranged for the transfers to take place prior to any of the restructuring being undertaken to ensure that no capital gains liabilities arose. <\/p>\n

During our calls to make arrangements with the various parties involved, it became clear that the client required additional advice and support outside of our original engagement. The client needed advice with the entire business sale to assist with due diligence enquiries and liaison with the solicitors. <\/p>\n

To the rescue came Nick Harrison, the director of CTT Accountancy, who took on the role of overseeing the sale. Without his coordination to help align the various parties, the duration of the process would likely have doubled.<\/p>\n

On every step of the journey, we continued to provide support and advice wherever needed. This included help with VAT registration and the treatment of an overdrawn Director\u2019s Loan Account (DLA), resulting in more positive outcomes:<\/p>\n

\u2022 We opted to tax the property in the new entity which enabled recovery of VAT on the property transfer, totalling \u00a32.12m. The first VAT return was submitted by CTT Accountancy and the refund successfully received following HMRC enquiries in October 2022.<\/p>\n

\u2022 Our advice on DLA resulted in mitigated a self-assessment liability of circa \u00a3220k.<\/p>\n

That\u2019s not all. Before the transfer was finalised, we reviewed the calculation of the sale proceeds and secured a better deal for the client with an additional \u00a3432k of sale proceeds.<\/p>\n

A last-minute problem to solve<\/strong>
\nIt seems to be a rule of life and business that a proverbial spanner will be thrown into the works just before the final deadline.<\/p>\n

As mentioned, the property was due to become a separate entity as part of the business restructure. The plan was for the mortgage to be transferred with the property. <\/p>\n

Cue spanner. Unfortunately, the mortgage provider pulled out at the last minute. There was no time to source an additional funder in the timescales available for the deal to complete.<\/p>\n

Therefore, CTT needed to provide a timely solution without impacting on the terms of the deal.<\/p>\n

To overcome this hurdle, we sent proposals to the buyer that provided a temporary loan until a mortgage was taken out with a new company. The buyer agreed.<\/p>\n

Our guidance did not drop off there. We proceeded to support by reviewing all the legal documents for the loan and mortgage from a tax perspective on behalf of the buyer and advised them accordingly.<\/p>\n

The future<\/strong><\/p>\n

Although the client came to CTT Group for support on a one-off piece of work, he has decided to return for his ongoing accountancy needs. <\/p>\n

Our collective experience \u2013 gleaned through collaboratively working on many complex cases such as this \u2013 has saved the client millions of pounds and prevented the loss of a significant amount of time that could easily have amounted to months. Our involvement has thus been invaluable to all parties concerned with this transaction, thanks to our ability to overcome hurdles as they present themselves.<\/p>\n

This high standard of multidisciplinary advice is CTT Group\u2019s bread and butter. We pride ourselves on having the expertise to handle any case, no matter how complex. This client story is a testament to our ability to provide an exceptionally high-level consultancy service without clients or advisors needing to enlist the support of multiple organisations.<\/p>\n\n\t<\/div>\n\t

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