Corporation Tax

Summary of main types of company reorganisation

Produced by Tolley
  • 27 Apr 2022 05:11

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Summary of main types of company reorganisation
  • Demergers
  • Reconstruction involving a transfer of a trade
  • Reduction in share capital
  • Purchase of own shares
  • Transfer of a trade
  • Further reading

Summary of main types of company reorganisation

This guidance note summarises some of the ways in which companies may reorganise their activities and some of the key tax considerations.

Demergers

Groups may want to split out their activities for many different reasons. There may be conflicting interests between shareholders, legal reasons to separate a trade out from the rest of the group with corporate protection, or it may be the only way for a purchaser to be able to buy certain parts of the business.

The term ‘demerger’ covers several possible structures:

  1. statutory demerger

  2. demerger by way of reduction of share capital (often referred to as a capital reduction demerger)

  3. demerger by Insolvency Act 1986, s 110 demerger (also known as a liquidation demerger)

There are tax provisions which should enable certain tax advantages, mainly that for tax purposes a qualifying distribution is exempt and as such there is no income tax for the shareholder.

For more information see the following guidance notes:

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Consortium relief

IntroductionConsortium relief enables losses of a consortium company to be transferred to consortium members in proportion to the consortium member’s interest in the consortium company, and vice versa. Consortium relief is a flexible relief which is available in several different scenarios which are

23 Mar 2022 10:50 | Produced by Tolley Read more Read more

Purchase of own shares ― overview

Companies Act 2006 allows a company to repurchase its own issued share capital, provided certain conditions are met. This type of transaction is sometimes referred to as a ‘share buyback’ or a ‘purchase of own shares’.The repurchased shares can either be immediately cancelled, which is typically the

23 Mar 2022 10:44 | Produced by Tolley Read more Read more

Payment of tax due under self assessment

Normal due dateIndividuals are required to pay any outstanding income tax, Class 2 and Class 4 national insurance and capital gains tax due for the tax year by 31 January following the end of the tax year (ie 31 January 2021 for the 2019/20 tax year). From 6 April 2020, UK resident individuals who

Read more Read more