Protecting Your Assets
What was the problem?
Our client is a manufacturer who imports goods from Asia and distributes their finished goods throughout the UK and Europe. Over many years, the client has worked hard, made good money and used the profits to purchase the building from which the company operates.
Our client has been in the fortunate situation where they have one very significant, loyal customer. However, it is never good to have all your eggs in one basket and events over recent years (Financial Crash, Brexit etc.) has led our client to have concerns “what happens if my customer goes bust?”; “What happens if a claim were made on the company and it brings the company down?”
The question was posed – how can our client protect their main asset (the property) against the uncertainties of the future?
What was the solution?
After many discussions with the client where several options were considered, it was decided that the best approach was to split the company into its component parts: assets and trade.
Sherlock & Co proposed that a group be set up and the main asset of the company (the property) be ‘hived-up’ into a holding company, leaving the trade in the pre-existing company.
Sherlock & Co worked with the company solicitors and company formation agents and proposed a share-for-share exchange to create a new group structure after which the trade and assets could be split up.
The whole process involved setting out the position to HMRC so that various elections could be made, at the right time, so as not to trigger any unwanted tax charges on the company restructure.
What was the result?
Our client now operates two companies: one trading and one a holding company for the main asset – the company property.
Working together with the client, the company’s solicitors, the company formation agent and HMRC; Sherlock & Co reorganised the client’s business such that if the worst should happen; the trading company can be closed down or jettisoned leaving the Directors with their main asset totally unaffected.
The client continues to trade, in much the same way as they have over the last 20 years, secure in the knowledge that if external events conspire against them, then their hard work to date has not been wasted because their main asset is protected.
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