Case study

Reorganisation of family farming company

Background: A long standing farming company owned land with possible future development potential. The company also owned rental properties with significant debt attached. The family wanted the son to succeed to the farming business, the rental properties to pass to other members of the family and the development land proceeds to reduce debt and be available for the family’s use. 

How we helped: We worked with the family and the bank to find a tax efficient way of removing the farming trade and assets from the company. This involved setting up a group structure, re-arranging the finance and a distribution to the family through liquidation. The tax implications of the restructure involved corporation tax, capital gains tax, stamp duty land tax and VAT. By discussing and proceeding with the restructure before the potential development land increased significantly in value, the family benefited from a combined lower rate of corporation tax and capital gains tax. The restructure also improved the inheritance tax position in that after two years all the farmland and buildings qualified for business property relief as well as agricultural property relief.