A lot of construction firms end up with everything inside one limited company.
The trading risk sits there. So does the yard, the property, the plant and whatever cash has built up over a good few years. One bad contract, one dispute with a main contractor, one claim that goes further than the insurance covers, one customer who folds owing you six figures, and all of it is standing in the same place.
A group structure puts a distance between the part of the business that takes the risk and the part that owns the assets. It is a normal thing for a construction business of your size to look at. It is also not right for everyone, and it carries tax consequences that have to be worked through before anything moves.
The general background on group structures is covered elsewhere on the site. This page is about looking at yours and telling you whether to do it.
What we are actually looking at
Where the risk sits today. Contracting is the risky end. If the company holding the contracts is the same company that owns the unit you work out of, the unit is exposed to the contracts.
What you own that is worth protecting. Commercial property, plant and machinery, vehicles, and retained profit that has never been taken out.
Whether a group is the answer at all. Sometimes the exposure is better dealt with by insurance or by how new work is taken on. A group brings running costs and paperwork with it, and if the reason for it is thin then it is not worth having.
Whether there is a genuine commercial reason. A restructure has to stand on its own commercial feet. Where the only purpose is a tax outcome, it is the wrong reason and we will tell you so before you spend anything on it.
What moving assets would trigger. Property does not move between companies for free. A transfer has consequences on both sides, and those get worked out in full and put in front of you before anything is signed. This is the part that most often changes the answer.
What is included
- A review of your current structure, what sits in which company, and what is exposed to what
- A written recommendation, including the recommendation to leave things as they are where that is the right call
- The tax position on any proposed transfer of property, plant or trade, worked out before a decision is taken
- Setting up a holding company and any subsidiaries, with the share structure done properly at the outset
- How property and plant are held and charged out inside the group
- Intra-group arrangements put in writing. Management charges, rent, plant hire and any loans between companies
- The ongoing compliance the group creates, handled as one job. Separate accounts and returns for each company, plus the intercompany positions reconciled and consolidated where that is required
- A view on how the structure affects a future sale, so you are not unpicking it under time pressure in five years
How it works
- First call. We go through what the business owns and what is worrying you about where it sits.
- We map the current position and put the exposure on paper. That alone changes some people’s minds in both directions.
- We work out the tax consequences of the options, including doing nothing.
- You get a written recommendation with the costs of setting it up and the costs of running it each year.
- If it goes ahead, we form the companies and put the intra-group agreements in place, including the Companies House filings.
- We then run the compliance for the group and review the structure as the business changes.
Who this is for
UK construction limited companies turning over between £500,000 and £5 million that own property or substantial plant, or that have profit sitting in the trading company. It also suits firms taking on a different kind of work, such as a first development, where keeping that away from the contracting business makes sense.
It is not for you if the company has no assets worth separating, because a group would then be cost with nothing on the other side. It is also not for you if you want a structure put in place quickly without the transfer consequences being worked out first. That is the sequence that leaves people with an unexpected bill and a structure they cannot undo.
Common questions
Do we need a holding company?
Often no. It depends on what you own and what your contracting exposure looks like, and answering that properly is the first piece of work.
Can we move our property into a separate company?
Sometimes, and it is a transaction with tax consequences on both sides. It gets modelled before anything moves, never afterwards.
Will this protect us if a contract goes badly?
It can put assets outside the company carrying the contract. It does not cover personal guarantees you have already signed, and those get reviewed at the same time.
How much extra work does a group create?
More than one company means more than one set of accounts and returns, plus the intercompany positions to keep straight. We build that into the recommendation so you can see the running cost before you commit.
We were told a group would save us tax. Is that true?
That depends entirely on your position, and a tax saving on its own is a poor reason to restructure.
Book a call. Tell us what the company owns and what it contracts for, and we will give you a straight view on whether a group is worth doing, including when it is not.
Common questions
Is a group structure worth it for a company my size?
It depends on what you are trying to do. A group can ring-fence risk between trading and property, move profits without a tax charge, and make a future sale cleaner. It also doubles the compliance. We look at your position and tell you plainly whether it earns its keep.
Can I move a property out of my trading company?
Sometimes, and rarely for free. Depending on how it is done there can be Corporation Tax on the gain, Stamp Duty Land Tax, and VAT consequences. There are reliefs that apply in the right circumstances. It needs working through before anything moves, not after.