Situation

The client sought advice on extracting cash accumulated from years of successful trading.

They needed to determine the best method for cash extraction, considering various options including the Employee Ownership Trust (EOT) route.

Approach and activities

After thorough analysis, the client opted for a combination of medium-term retirement, management buy-in via Enterprise Management Incentive, and a capital share buy-back for the founders.

Crowe designed the share buy-back, allowing for a tax-efficient capital exit for the retiring director-shareholders, with the exit price paid by the company as reserves and cash allowed.

The tax team provided significant technical input early in the decision-making process, ensuring the transaction proceeded smoothly despite some HMRC queries.

Outcome and benefits

The transition allowed for a tax-efficient exit and ensured the company’s continued success.

Crowe hopes to continue advising individuals and the business as the new management takes over and a new phase of the business begins.