Employee Ownership Trusts - Tax Aspects and Other Issues

A Brief History of EOTs

• What is an EOT? - The view from 30,000 feet.
• The recent consultation on EOTs and its result, if known.
• What are the potential exit routes for the owner and why might an EOT be appropriate?
  • The qualifying conditions 
  • Trading company or principal company of a trading group 
  • Application to all employees on the “same terms”
  • Acquiring a controlling interest 
  • Shareholders who are directors/employees 
  • Trust property to be applied for the benefit of all eligible employees
• The 3 steps in creating an EOT
  • Establishing an EOT and appointing the corporate trustee 
  • Sale of the shares to the EOT 
  • Company make contributions to EOT to pay for the shares. 
• Appointing trustees of the EOT
• Can you sell a partnership business to an EOT?
• Financing the acquisition for the EOT
• What are the advantages of selling to an EOT for the original owner?
• Seeking clearance for transactions in securities from HMRC
• What are the advantages of an EOT for the employees?
• Incentivising the employees after the transfer – options and exits
• Potential areas of concern
• Potential issues after the transfer for the original owners
• Disqualifying events after the transfer and their tax consequences

Q&As

• The opportunity to raise examples you have come across and discuss the tax implications
• Regular pauses for questions on each topic covered to take questions and queries.

Our trainer advises on all areas of revenue law, both corporate and personal, but has a particular interest in corporate tax matters including, acquisitions and disposals, reconstructions and demergers, MBOs, returning capital to shareholders, s425 schemes, SDLT, stamp duty and SDRT.

He has special expertise in the taxation of insolvent companies, members' voluntary liquidations (including s110 schemes) and bankruptcy, and lectures regularly to R3 and is a member of the R3/HMRC liaison group which meets regularly to discuss issues of conflict between insolvency law and tax law. Over the years he has been involved in advising on the tax aspects of some of the UK's major insolvencies including Maxwell, Pollypeck, BCCI, Olympia and York, Mayflower, ITVdigital, MFI, Allied Carpets, Borders, Farepak Lehman Bros.  He is a Fellow of the Association of Business Recovery Professionals (FABRP) having passed the JIEB examinations.

Following his call to the bar by Middle Temple in 1986 and pupillage in insolvency chambers (3/4 South Square) where he was a pupil to the late Gabriel Moss QC and tax chambers (Pump Court) he joined Paisner & Co (now Bryan Cave Leighton Paisner) before moving on to Allen & Overy.  In 1993 he joined Coopers & Lybrand (now PwC) and then in 1996 Deloitte, where he was made a corporate tax partner in 1999.

In 2008, fearing he would be found dead in his hutch under a pile of budgets, appraisals and forecasts he returned to the Bar and joined Temple Tax Chambers.

• Identify the different exit routes and why an EOT might provide a suitable exit route for the owners.
• Understand the fundamentals:
  • Setting up an EOT
  • Running an EOT
  • Exiting an EOT
• Understand the tax advantages for the original owner and those for the employees.
• Learn what are the potential downsides for both the original owner and the employees.

• This EOT webinar combines an examination of the technicalities with the practicalities. It includes examples to assist with understanding the EOT rules.
• The trainer is a barrister with over 35 years of experience in tax who has advised on a number of EOTs often when issues arise.
• The EOT webinar encourages participation and allows for all questions and clarifications to be considered.
• We ensure this course is up to date and will include the latest developments including the results of HMRC’s consultation on potential changes.

This employee ownership trust webinar is designed to help attendees appreciate the attractiveness of EOTs as a possible exit route for an entrepreneur. The suitability of this route will be explained when other exit routes may be inappropriate. It will discuss the tax advantages for both the original owners and the employees of the company as well as any potential drawbacks for each. We will be using examples to apply the rules in practice so that delegates have a full understanding of the tax consequences for each of the parties involved.