The result was a tax-efficient, scalable group structure ready for future growth.

We were instructed by a group of three shareholders (the “Shareholders”) who collectively held shares in five private companies. Three of the companies were wholly owned by the Shareholders, while the other two had an additional minority shareholder who would not form part of the group structure. The Shareholders’ aim was to reorganise their interests into a formal group structure under a newly incorporated holding company. Their objectives included:

• Streamlining business operations under a centralised structure;
• Creating flexibility for future expansion through the addition of subsidiaries;
• Enhancing administrative efficiency and corporate governance; and
• Positioning the group for tax and regulatory efficiencies.

Before approaching us, the Shareholders had devised a structure for the reorganisation and had already obtained advance clearance from HMRC confirming that the transaction would qualify for capital gains tax relief.

The Challenge

While a structure had already been devised and cleared, our review identified a key opportunity: the existing plan did not qualify for Stamp Duty relief, meaning significant stamp duty costs could arise on the share transfers.

Our challenge was to:

• Restructure the transaction to meet the strict criteria for Stamp Duty relief under section 77 of the Finance Act 1986;
• Ensure the reorganisation was implemented in a way that maintained the Shareholders’ commercial objectives and the advance tax clearance already secured; and
• Bring the two companies with an additional shareholder into the group without compromising the eligibility for relief on the overall structure.

How We Overcame It

We advised the Shareholders to adopt a revised structure that would enable them to benefit from Stamp Duty relief—an outcome not achievable under the original plan. We then approached HMRC with the revised structure and obtained advance clearance confirming that capital gains tax relief would apply and that the transaction would not be caught by anti-avoidance provisions.

To achieve this, we proposed a two-stage share-for-share exchange:

1. Stage One – We first implemented a share-for-share exchange involving the three companies that were wholly owned by the Shareholders. The shares in these companies were exchanged for shares in a newly formed holding company. This transaction was carefully structured to meet the conditions for Stamp Duty relief, allowing the Shareholders to restructure ownership with no stamp duty payable.

2. Stage Two – With the group structure in place, we completed a second share-for-share exchange to incorporate the remaining two companies—each of which had an additional minority shareholder—into the group. This second step was undertaken separately to avoid prejudicing the Stamp Duty relief obtained on the first stage.

Throughout the process, we liaised with the Shareholders’ accountants to align the transaction with the previously obtained capital gains tax clearance and to ensure tax efficiency was maintained.

Strategy for Success

Our strategy was underpinned by the principle of phased implementation to isolate and protect the relief-eligible parts of the transaction. Key elements of our approach included:

• Identifying and resolving a gap in the original structure that would have triggered unnecessary Stamp Duty;
• Designing a compliant alternative that preserved the commercial and tax intentions of the Shareholders;
• Ensuring technical compliance with both capital gains tax and Stamp Duty legislation;
• Delivering clear, pragmatic advice to all parties involved, with full documentation and support through completion.

By challenging the initial approach and implementing a refined structure, we secured a more favourable tax outcome for the Shareholders—one that preserved their clearance while significantly reducing transactional costs. The result was a tax-efficient, scalable group structure ready for future growth.