Return of capital demerger

Question

My clients are shareholders in a company which owns two restaurants. My clients have been approached by a prospective buyer to acquire the company but the buyer only wants one of the restaurants (the target restaurant). My clients have asked how the other restaurant business (the retained restaurant) can be extracted from the company prior to the sale in a tax efficient way. They have heard that if it is just transferred to them there will be tax consequences both for the company and for them as individuals.

Answer

They are correct but it should be possible to achieve the desired result in a tax neutral way through a tax efficient return of capital demerger....