Client Scenario
Our client was a highly successful, award-winning entrepreneur who received an offer to sell his business for more than £60 million. As the majority shareholder and with family located in the UK and overseas, he wanted to preserve his wealth for generations to come whilst managing his tax position by securing Pre-sale Advice. He said he had heard about Business Exit Planning from his entrepreneurial friends and so was quite aware that the exploration and implementation of Pre-sale structuring was key to realising tax efficiencies.
Our Services
Our business exit planning objectives were multi-faceted and included:
- Making provision for his children and wider family
- Protecting his post-sale interests whilst allowing flexibility for future use
- Providing tax-efficient pre-sale structuring for him to enter into the transaction
By engaging with us early in the process, we were able to work with the client and his financial advisors to put together a proposal that evolved over a number of months – not ‘off-the-shelf’. There was no single ‘right’ pre-sale advice, as so much depended on the aims and aspirations of the individual client.
Outcome
Throughout the course of the transaction, the range of pre-sale structuring services we provided for the client included:
- Establishing a discretionary trust for his family, allowing the client to retain an element of control over the funds without giving cash to his family outright. By arranging this prior to the transaction, the business shares were able to be settled into trust without the usual 20% entry charge to Inheritance Tax, nor as Capital Gains Tax payable
- Business exit planning cash-flow forecasting to establish an appropriate number of shares to settle into the trust, based on the initial provision the client wished to make for his family
- Longer-term considerations as to the underlying structure of the trust, taking into account the client’s wishes for the funds to be invested in a range of assets
The outcome of this pre-sale advice project was robust and flexible pre-sale structuring designed to meet the very specific needs of the client. The tax position was carefully managed so as not to create additional liabilities whilst making sure all required compliance and tax payments were dealt with appropriately.
Please note: this case study reflects the facts, circumstances and tax position at the time the project was undertaken. It has not been updated for any subsequent change in tax law or practice and must not be construed as advice, or otherwise relied upon for any purpose.
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