A group is formed when one company has control of, owns, a number of subsidiary companies.

A group is different to an arrangement where an individual owns a number of companies personally. In this case the companies would be called associated or sister companies.

What are the advantages of a group structure?

One useful reason for setting up new ventures as a separate subsidiary is the mitigation of commercial risk. This would ensure that existing trading assets of the rest of the group are protected from any liabilities that may arise in relation to the new venture.

Assets can usually be transferred between group companies at their book value rather than market value. In most cases this would mitigate against any gains being taxed at the point of transfer.

Tax advantages

As long as the group is formed effectively, tax losses and other reliefs can be used across the group.

As noted above transfers of assets can be made between group companies without triggering capital gains tax charges.

In most cases, dividends paid between group members are not taxable as they are a distribution of taxed profits.

Setting up a group structure

Planning to create a group structure can be a complex exercise and there will be costs in making sure that the structure adopted protects existing trades and assets.

If you are interested in discussing the advisability of setting up a group arrangement for your present or future trading activities, please call so we can flesh out your options.