Restructuring reaps rich rewards (and leaves old accountant red faced!)
I was outlining an idea to an existing client that had the potential to save them a small fortune in tax, when he suddenly stopped me in mid sentence and suggested that I should be telling one of his business owning friends about the same idea.
A meeting was arranged and a few days later I found myself sat in his friends offices. Sure enough, his friends situation was very similar and it looked like they could also benefit from the same idea – taking a group of businesses that were trading as a partnership and transferring them into a limited company.
After a proper review of the business, its trading history and future plans it was determined that this would indeed be a beneficial course of action.
They contacted their (soon to be!) previous firm of accountants to check if what we were suggesting was actually possible. The accountant confirmed that it was … and then cheekily asked if the client wanted them to take care of it for them!
Instead, the client asked us to take care of this matter for them and as a result of this fairly simple restructuring the partners were able to receive a tax free lump sum from the sale of assets to the limited company AND they also saved £135,000 in tax, money they were able to use to grow their business even more.
Understandably, our new client was quite annoyed at their old firm of accountants for not taking the initiative and advising them of this opportunity.
Unfortunately, we’ve come across clients who have been ‘un’advised like this many, many times before. We routinely find more flexible and tax efficient ways for people to run their businesses and sometimes within minutes of meeting them for the first time!
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