The new owners of a family company were in dispute with the people who had sold them the shares. Eventually, the two sides agreed that to settle the matter, the previous owners would waive the sum of £75,000 they were owed by the company. James Bailey was asked to comment on the tax consequences of this agreement, and he advised on a different way to achieve the same result, which had the following tax benefits:

The company paid over £14,000 less tax

The old owners got a tax repayment of £7,500

The new owners got £75,000 cash tax free

Tax investigations

A pub had been under investigation for 18 months, and the tax inspector was demanding an increase of over £13,000 in the profits for the year. He claimed to have “information” about unrecorded cash, and had also produced an analysis of the takings that he claimed showed that the pub must be understating its sales. A letter was drafted to the inspector challenging him about his “information” and demonstrating that the analysis of the takings was based on incorrect principles. The inspector replied by agreeing to close the enquiry down and accept the accounts as submitted.

Shareholder deals

A family company was in difficulties, and two of the five shareholders had agreed to buy the other shareholders out. The company’s accountants estimated the tax cost would be about £65,000. James Bailey was asked  if there were any planning ideas that would reduce this. James suggested a way to restructure the deal so that there was no tax to pay, and the shareholders being bought out were left with tax losses of nearly £250,000 to offset against future capital gains.

Compromise agreements

A director and shareholder of a medium sized company had an employment related dispute with the company. A compromise agreement with a termination payment was proposed for the purchase of the shares and in settlement of any claim. We were called in at an early stage and advised on how the termination payment could be re-structured and worded to strengthen any challenge on the £30k exemption and also reduce income tax and NI to save an estimated £25,000.

Corporate property disposals

An owner managed company had its premises compulsorily purchased by the local authority. One of our tax consultants James Bailey was personally asked to advise on the choices open to the directors, and produced a report showing how they could either continue in business and pay no corporation tax on the sale of their premises, or alternatively, pay corporation tax at 19% on the profit from the sale and then close the company down and extract the cash from the sale at no tax cost.

Tax on employee share schemes

An employee exercised EMI share options and also disposed of a block of shares held in his employers company. We were appointed to advise of any relief's available and to advise on the various disposal selections the employers scheme provided. Our consultants were able to demonstrate how the issued loan notes deferred some of the gains and that the income tax and capital gains tax liability was £Nil. Taper relief and allowances were maximised. Specific wording was required on the self assessment form.

Inheritance tax on business property

A family partnership had several investment properties as well as a trading enterprise, and were worried about inheritance tax upon death. An estimate of the inheritance tax liability was around £400,000. Our director James Bailey was able to demonstrate how the business could be restructured so that the estimated Inheritance tax liability was reduced by £340,000.

Capital gains tax on a second property

A property investor with a number of properties had purchased a potential second residence a number of years ago. No main residence election had been made and any election was now out of time. Accountant 2U Direct were appointed to advise on reducing the estimated £35,000 of capital gains tax that would arise upon the disposal of the this property. We devised a strategy that when implemented would reduce the tax liability to £Nil.

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