Corporate Demergers: Tax Aspects of Splitting a Company

Introduction to Demergers – Commercial and Strategic Context

• What is a demerger?
• Common commercial drivers:
• Demergers compared with alternatives:
  • Asset sales
  • Share sales
  • Hive-downs
• Short discussion: When is a demerger the wrong solution?

Overview of Demerger Structures

• Exempt distribution demergers
• Liquidation demergers
• Capital reduction demergers
• Key structural decision points:
  • Choice of route
  • Shareholder profile considerations
  • Timing and sequencing

Core Tax Rules Affecting Demergers

• Corporation tax implications of demergers
• Capital gains tax considerations
• Income tax risks
• Stamp duty and stamp duty land tax issues
• Treatment of shareholders before and after the demerger
• Anti-avoidance provisions

HMRC Clearances

• When clearance is required or advisable
• Clearance under the Transactions in Securities rules
• Clearance under the demerger provisions
• Common clearance pitfalls
• Managing uncertainty and timetable risk
• What to do if clearance is refused or qualified

Detailed Case Studies – Demergers in Practice

• Case Study 1: Demerging property from a trading company using a capital reduction
• Case Study 2: Shareholder separation following a commercial dispute
• Case Study 3: Pre-sale demerger to facilitate a third-party disposal
• Identification of:
  • Key tax risks
  • Commercial trade-offs
  • Practical implementation challenges
• Discussion of alternative structures and “lessons learned”

Common Pitfalls and Risk Areas

• Failing to align commercial and tax objectives
• Poor sequencing and timing
• Overlooking stamp taxes
• Clearance assumptions
• Shareholder communication issues
• Post-demerger compliance and monitoring

Practical Takeaways and Final Q&A

• Demerger planning checklist
• Key questions to ask at the outset of any demerger
• Warning signs that additional advice or restructuring may be required
• Open Q&A session

Redcliffe's corporate demergers trainer is a Director and Head of Corporate Tax at an award-winning firm of tax advisers. He provides support to accountants, tax advisers, solicitors and their clients.

He specialises in complex corporate tax matters, including:

• Transactions tax and company reconstructions
• Succession planning, including Employee Ownership Trusts and Management Buyouts
• Venture Capital tax reliefs, in particular EIS and SEIS
• Employment Related Securities and employee share schemes

He is a regular contributor to various tax journals, including Taxation magazine, Tax Journal, Tax Adviser and ICAEW Taxline. He shares his expertise with the broader professional community. He is also a contributing author of Tolley Tax Planning, Finance Act Handbook and the British Tax Review publications, as well as a podcast dedicated to sharing expert tax advice from the industry’s leading specialists.

This course will give delegates a clear, practical and commercially focused understanding of corporate demergers, going beyond the legislation to explore how demergers are actually planned, structured and implemented in practice.

By the end of the course, delegates will be able to:

• Understand why and when a demerger is appropriate
• Identify and compare the main demerger routes and their advantages and disadvantages
• Navigate the key technical tax implications of demergers and their rules
• Anticipate and manage practical implementation issues, including sequencing, documentation and stakeholder risks
• Apply learning to real-world situations through detailed case studies and worked examples

• We place strong emphasis on practical implementation, and not just legislation.
• Detailed, realistic case studies reflect common real-world scenarios.
• This demerger tax implications training focuses on decision-making, sequencing and execution. Not just tax outcomes.
• Highlights commercial, legal and tax interactions, rather than treating tax in isolation.
• Delivered in a clear, accessible style suitable for advisers and in-house professionals.

This course will assist professionals who encounter demergers in practice, including:

• Tax advisers and corporate tax specialists
• Corporate and commercial lawyers
• Accountants and financial advisers advising owner-managed businesses
• In-house tax
• Legal and finance teams
• Corporate finance professionals involved in restructuring projects

It is suitable for those with a working knowledge of corporate tax, but you do not need to have prior specialist demerger experience.

This one-day course provides a comprehensive and practical guide to corporate demergers and demerger tax. We combine technical explanation with real-world application.

Delegates will leave with a clear understanding of how demergers work in practice, the risks to watch for, and how to structure and put in place demergers confidently.