My client is a partnership which is trading. There are six partners (two main partners and four junior fixed-share partners) all of which are companies. The partnership was set up this way – with companies as partners rather than the individuals themselves – in 2011 to avoid the 50% income tax rate. The owners of the two main partner companies (‘the founders’) are considering the future of the business which they believe may involve a sale to a third party or possibly an investment by a third party to fund the expansion of the business. The founders believe that for commercial reasons it would be easier if they have a single corporate structure rather than the existing partnership structure. How would they achieve this and what would be the tax impact of any changes?
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My client is a partnership which is trading. There are six partners (two main partners and four junior fixed-share partners) all of which are companies. The partnership was set up this way – with companies as partners rather than the individuals themselves – in 2011 to avoid the 50% income tax rate. The owners of the two main partner companies (‘the founders’) are considering the future of the business which they believe may involve a sale to a third party or possibly an investment by a third party to fund the expansion of the business. The founders believe that for commercial reasons it would be easier if they have a single corporate structure rather than the existing partnership structure. How would they achieve this and what would be the tax impact of any changes?
...
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