Many Groups consist of trading and non trading businesses and often assets will get left behind in non trading businesses or businesses that only exist to cross charge their services, this is inefficient, to make a Group work efficiently assets need to centralised. But how can you do that?
Hive Ups and Hive Downs refer to the transfer of a business or assets within a group company.
What is a Hive Up?
A Hive Up is where a business or assets are transferred (or hived up) to the parent company.
What is a Hive Down?
A Hive Down is effectively a reorganisation of a company whereby a business or businesses are transferred (or hived down) to a subsidiary.
What could you Hive?
How do you Hive?
You need to sell the assets at their market value between the companies and to be a subsidiary a company must be 75% owned by its parent.
HMRC have rules to prevent loss buying ie buy a business with losses and use the losses to cut you tax bill, the rules are set out in CTM06300 http://www.hmrc.gov.uk/manuals/ctmanual/CTM06300.htm
It isn’t possible to get HMRC Clearance prior to a Hive Up or Hive Down but provided everything is fully disclosed and there are good commerical reasons for Hiving its likely HMRC will be supportive.
As always, if in doubt, seek advice.