Business restructuring & exit charges — where does doing it myself start to cost money?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the analysis identifies what was transferred — customer relationships, workforce in place, rights under a contract — and whether an independent party would have been compensated.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Do we owe an exit charge for becoming a limited-risk distributor?
Possibly, and the question is not answered by the label. Converting a full-risk distributor into a limited-risk one moves profit potential from one country to another, and the analysis asks what actually left: customer relationships built up locally, a workforce in place, rights under a contract that had value. It then asks whether an independent party in the same position would have been compensated for giving those things up. If nothing of value moved, because the entity never held the customer relationships or the contract could be terminated on its own terms without compensation, there may be no charge at all. The work is establishing which of those is true on your facts, before the conversion rather than after.
What counts as something of value transferred in a restructuring?
Not only assets sitting on a balance sheet. The items that usually matter are customer relationships, a workforce in place, and rights under existing contracts: things the losing entity had, that the receiving entity now has, and that an independent party would have expected to be paid for. Know-how and the practical ability to carry on a line of business can fall in the same category. The test is practical rather than formal. What could the entity do before the change that it cannot do now, and what can the other entity do that it could not do before? Answering that honestly is most of the analysis.
Can a group reorganise without paying an exit charge at all?
Yes, where nothing of value actually moved. A genuine change in how a business is run is not itself a transfer, and groups reorganise for commercial reasons all the time. The difficulty is that the file usually asserts this rather than shows it. What supports the position is a functional record made at the time: what the entity did before, what it does now, who held the customer relationships in fact, what the contracts said about termination, and whether the people and their responsibilities moved. A restructuring documented while it is happening is defensible. The same restructuring reconstructed years later, from memory, generally is not.
Our staff stayed but the contracts moved, is that a transfer?
It can be. Rights under a contract are one of the things that can carry value across a border on their own, without anyone changing desk. If the local entity held agreements with customers, and those agreements were novated or allowed to lapse and rewritten with an overseas entity, the profit potential attached to them has moved even though the people have not. The counter-argument, where it is available, sits in the contracts themselves: terms that were short, terminable without compensation, or genuinely dependent on the group's brand rather than on the local entity's own efforts. Read the agreements before forming a view.
How should a limited-risk entity be paid after the conversion?
On the functions it genuinely performs after the change, not on the ones described in the new agreement. That is the half of the exercise groups most often get wrong. The conversion is documented, the exit question is argued, and then the new pricing is set at a level that quietly assumes the entity has less responsibility than it still has. If the entity continues to hold inventory, to carry bad debt, or to decide local pricing and marketing, it is not limited-risk in fact, whatever the paperwork says. Post-restructuring pricing has to match the reduced functions actually performed, so the functional analysis after the change matters as much as the one before it.
Which country raises the exit charge, ours or theirs?
The one losing the profit potential. A restructuring that moves functions, assets or risks out of a jurisdiction leaves that jurisdiction with less to tax in future years, and its administration will ask what was paid for what left. The receiving country has the mirror interest: it will look at whether a payment made was too large, and whether the entity now earning more actually does the work. That is why a one-sided analysis is dangerous. A restructuring file that reads well in one country and cannot be shown in the other is not a finished piece of work.
What is the CUP method?
Comparable uncontrolled price. You find the price charged in a comparable transaction between unrelated parties and test your intercompany price against it. It is the most direct of the methods and the most persuasive when it fits, because it compares like with like at the transaction level. Its limit is data: close comparables exist for commodities and standard products, rarely for bespoke services or unique intangibles, which is where the margin-based methods take over. See our transfer pricing work.
What is the difference between a master file and a local file?
The master file describes the group as a whole — its structure, where value is created, how intangibles and financing are held. The local file covers one entity's own related-party transactions in detail, with the analysis supporting each price. Larger groups file both, plus country-by-country reporting above a size threshold, and the thresholds differ by country. See master file vs local file.
