Demerger timeline planner

On prudent planning assumptions, most demergers take around three to four months from first advice to completion. The main drivers are the HMRC clearance period, how quickly information is available, whether valuations or lender consents are needed, and the route. A liquidation demerger usually takes a little longer because a liquidator is appointed.

For the statutory clearances commonly used on demergers, HMRC must give its decision within 30 days of receiving the application. If it asks for more information within that period, the 30 days run again from when the information is provided. A complete, well-evidenced application keeps the timetable short.

They shouldn't. Clearance is given on the facts and steps described in the application, so implementing first removes the protection it offers, and changes after clearance may mean it no longer applies. Legal documents can be prepared during the clearance period so completion can follow quickly once it arrives.

HMRC often asks for further information or clarification, particularly where the commercial reasons need more evidence or a sale is in view. Allowing for one round of questions gives a more realistic timetable. If HMRC doesn't ask anything, you finish earlier.

They usually run alongside the clearance period, so they needn't add time if they're started early. Valuations are normally needed for partitions, where shareholders take different businesses, so each side receives fair value, and sometimes for stamp duty or other purposes.

It depends on the route. A capital reduction demerger needs a share exchange, a solvency statement, a special resolution and transfer documents. A statutory demerger needs board minutes and dividend or transfer documents. A liquidation demerger needs a declaration of solvency, the liquidator's appointment and a section 110 agreement. Your solicitor prepares these, following the tax step plan.

Usually Companies House filings for the share changes, resolutions and any new companies, stamp duty returns or relief claims for share transfers, SDLT returns within 14 days where land moves in England or Northern Ireland, and the reliefs claimed or reported in the companies' and shareholders' tax returns.

Sometimes, but rushing raises risk. HMRC's 30-day period can't be shortened, and a demerger closely followed by a sale needs particular care with the reliefs. If you have a deadline, talk to us as early as possible, and we'll tell you honestly whether it's realistic.

No. It uses typical durations to help you plan and to show when advice needs to start. The real timetable depends on your group, your advisers, HMRC and any third parties such as lenders. We'll give you a firm timetable once we've seen the facts.

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