Helping Palimpsest Book Production Ltd with their transition to Employee Ownership

Our Employer Solutions Taxperts have written a series of articles about Employee Ownership Trusts (EOT) on our EQ Taxperts website, including how an EOT sale structure is implemented, how the shareholders dispose of their shares to a Trust for the benefit of the employees, and how the selling shareholders are paid for their shares. In this article, we have provided an example of a company we assisted in its transition to employee ownership.

Palimpsest Book Production Ltd is the UK’s market leader in the provision of typesetting, digital and pre-press services to the publishing world, with over 50,000 books and ebooks produced in 25 years.

The shareholders were referred to us by Scottish Enterprise, as they were interested in transitioning to employee ownership as part of a succession plan. They wanted to sell a number of their shares in the company to a trust for the benefit of the employees.

The shareholders in Palimpsest understood that such a sale could be tax-exempt, but only if specific conditions were met. Though this was not the motive for the transaction, our Taxperts were brought in to ensure these conditions were all met, and provide assistance in applying to HMRC for the necessary pre-transaction clearance.

Members of our Employer Solutions team met with Craig and Ruth Morrison, directors and shareholders of Palimpsest, to discuss the proposal, and reviewed all documentation to ensure the strict conditions for a tax-free sale were met before presenting the application to HMRC to request pre-transaction clearance.

HMRC approved the clearance application within two weeks, which allowed our client to proceed with the transaction in the knowledge that there would be no capital gains tax implications.

Palimpsest has now successfully transitioned to employee ownership, and is delighted that the future of the company is in the hands of those who have been central to its development over the years. Craig Morrison, Managing Director of Palimpsest Book Production Ltd, commented:

“Having decided to transition to employee ownership, we required expert assistance to obtain HMRC clearance for the transaction. EQ Accountants came highly recommended as having expertise in this field.

From the initial meeting we found them very easy to deal with, they understood our requirements and adhered to the transaction timeline.

The process was very smooth and tax clearance (achieved on schedule) was key to our plans. I would have no hesitation in recommending EQ to anyone considering Employee Ownership.”

If you are considering selling your shares to an EOT, or would like more information, please get in touch with our Employer Solutions team on taxation@eqaccountants.co.uk or by calling one of our offices.