Avoiding group exit charges
Holdco transferred goodwill valued at a substantial sum to Subco just over 5 years ago.
Holdco still owns a 60% ‘passive’ stake in the share capital of Subco, but the owners of the remaining 40% of Subco’s share capital are working directors and are now considering an offer to acquire the other 60%. They believe that Holdco no longer contributes anything to the prospects of Subco and feel that they would be better off going it alone.
Before formalising the offer, the directors of Subco seek advice from SMH and are surprised to learn that if they proceed as planned they will incur a large capital gains tax liability.
We were able to advise how to avoid the charge completely with only a minimal change of plan.
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