The complexities of corporate transaction tax planning including SDLT implications

One of the mainstays of the Government’s recovery policy is the encouragement of small business and enterprise. Its success in this area is partially underlined by the number of new companies being registered at Companies House. In March 2011 alone a total of 43,619 new companies were registered, a rise of 5% on the previous year. With company liquidations virtually static at 15,533 for the month the picture for company growth is encouraging.

Those looking to set up a new business have access to a wealth of free advice from organisations such as banks and Business Link. Despite this, worryingly over a third of new businesses fail to ask for advice and undertake little or no research before setting up. These businesses are leaving themselves wide open to potentially sizeable tax charges in the future that could have been avoided.

The truth is that when it comes to managing corporate assets, the way in which they are acquired, treated within the company accounts and disposed of can have a huge impact on tax liabilities. Even the simplest transaction can lead to unexpected tax costs. This is particularly true when restructuring the business, merging with or acquiring another corporation or disposing of either assets or a portion of the business.

Let’s look at a simple example. The largest acquisition many companies will face is that of property. The purchase of property or a lease can attract Stamp Duty Land Tax (SDLT) of up to 5%. However, by taking appropriate advice it can be possible to mitigate this tax entirely. Again, when acquiring another company which has substantial property within its portfolio, the method of acquisition can mean the difference between attracting substantial SDLT charges and zero charges.

The earlier thought is given to potential tax implications the easier it is to mitigate tax charges. This is particularly important when dealing with international transactions and company mergers and acquisitions. However, the tax implications for individuals following company restructuring should also be taken into consideration. As tax mitigation specialists Newshams are able to give advice on corporate restructuring and SDLT, how it may affect any private or business transaction and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce the tax costs on your corporate transaction or e-mail us at and we’ll get straight back to you.

6th May 2011

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