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Assisting with Transition to Employee Ownership

EQ were referred to the shareholders of Palimpsest Book Production Company Limited by Scottish Enterprise, an existing client, as they were interested in transitioning to employee ownership as part of a succession plan. They wanted to sell a number of their shares in the company to a trust for the benefit of the employees.

The shareholders in Palimpsest understood that such a sale could be tax-exempt, but only if specific conditions were met. Though this was not the motive for the transaction, EQ taxation were brought in to ensure these conditions were all met, and provide assistance in applying to HMRC for the necessary pre-transaction clearance.

How we helped our client
EQ met with Craig and Ruth Morrison, directors and shareholders of Palimpsest, to discuss the proposal, and reviewed all documentation to ensure the strict conditions for a tax-free sale were met before presenting the application to HMRC to request pre-transaction clearance.

HMRC approved the clearance application within two weeks, which allowed our client to proceed with the transaction in the knowledge that there would be no capital gains tax implications.

Palimpsest has now successfully transitioned to employee ownership and is delighted that the future of the company is in the hands of those who have been central to its development over the years.

“Having decided to transition to employee ownership, we required expert assistance to obtain HMRC clearance for the transaction. EQ accountants came highly recommended as having expertise in this field. From the initial meeting we found them very easy to deal with, they understood our requirements and adhered to the transaction timeline. The process was very smooth and tax clearance (achieved on schedule) was key to our plans. I would have no hesitation in recommending EQ to anyone considering Employee Ownership.”

Craig Morrison
Managing Director
Palimpsest Book Production Ltd

For more information or to discuss further, please contact the Employer Solutions Taxperts.

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