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News – 10.04.24
Form PF: Are you up to speed with the latest developments?
Through this insight we will bring to your attention the main changes in a bitesize manner so that you can stay abreast of the requirements as they may apply to your firm. … Read more
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Tax relief on heritage assets: Am I eligible?
For assets considered to be of national heritage, relief from Capital Gains Tax and Inheritance Tax is available. … Read more
Upcoming event – 13.06.24
VAT update for charities
VAT insights for charity finance leaders. Stay current with the latest case law analysis and HMRC updates for informed, compliant financial strategies. … Read more
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SSE is a useful tool for any tax adviser undertaking corporate restructuring, including pre-sale 'hive- downs', where assets are transferred to a wholly owned newly incorporated company ('NewCo') before being sold to a purchaser with the resulting gain exempt from tax.
Normally, HoldCo will not have held the shares in NewCo for at least 12 months before being sold. SSE legislation permits the time the assets were used in a trade carried on 'by a group member' to count towards the 12-month holding period. However, as the recent Upper Tribunal judgement in M Group Holdings Limited v HMRC (2023) has shown, SSE will not apply to all hive-downs.
In M Group Holdings Ltd v HMRC (2023), a single trading company ('TradeCo') transferred its business through a hive down to a wholly owned NewCo and sold it 11 months later.
The Upper Tribunal determined that the legislative extension permitting the time assets were used by another group member does not cover the scenario where TradeCo forms a new company ('NewCo'), transfers trading assets to it, and sells it within 12 months of ownership. This is because the assets were not utilised in a trade conducted by any member of the group for at least 12 months before the sale; because prior to the incorporation of NewCo, no 'group' existed.
The judgement has wider implications for stand-alone company structures, not only pre-sale hive-downs but also other contemplated corporate restructuring such as de-mergers which often make use of the SSE provisions.
Companies looking to undertake any corporate restructure should obtain tax advice to verify the availability of any tax reliefs or exemptions, including SSE.
We can work with you to optimise the tax efficiency of contemplated corporate reorganisations, while avoiding such pitfalls. We also offer tax advice that is personalised to your specific circumstances. Discover how we can work together by filling the form below.
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