Case Studies

case studies

Issue 1: Rewarding employees with shares on a business sale

A founder shareholder was selling his business for around £50 million.  He had always intended to reward his management team on his selling the business but no formal arrangements were in place when the offer was received.  To give them shares in the company before sale, or cash after sale, would create a 66% tax charge.

What Jane did 

Jane was advising the Buyer who would be employing and relying on the employees after the sale. Everyone therefore wanted management to benefit from the sale.

A structure was put in place that enabled the relevant employees to become shareholders and receive sums payable on the earn out payable for the shares.  The cost both financially and in management time was minimised by ensuring the process was managed to fit in with the claiming of tax deduction on incentive arrangements.  It is estimated that this saved management approximately £1.5 million in tax.  The steps taken and communication with staff created an enthusiastic approach towards their new employer.

Issue 2: Exporting EU products to the UK

An EU company wished to export its “smoothie” product to the UK.  Its VAT status was uncertain.  If HMRC regarded the produce as food no VAT needed to be charged, but if it were regarded as a drink it would be a VAT-able product and the cost would need to be passed on to its customers.

What Jane did

After reviewing Customs Guidance, Jane reviewed all marketing and packaging material, as well as sampling the product itself. The process was therefore reviewed to make it robust against HMRC challenge and to make the product competitively priced.

Issue 3: Commercial landlord contributing to tenant’s refit costs

A landlord bank had agreed to make a significant contribution towards the refit costs of its tenant.  The landlord would not be able to claim capital allowances on these costs as it was the tenant who held the relevant interest in land for capital allowances purposes. The landlord would therefore obtain no tax deduction for its expenditure.

What Jane did

What the payment was being contributed towards and the terms of the funding was structured to enable the landlord to claim allowances on its contribution to the re-fit and to ensure that it maximised the deductions it could claim. This gave the landlord client a 23% cost saving on its expenditure.

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