Haines Watts working with Sohal Healthcare Limited

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Background

Sohal Healthcare is a healthcare business founded with the aim of providing high quality residential care for the elderly, in a community setting. It has a specialist focus on providing facilities for residents suffering from dementia.
Underpinning the organisation is a philosophy based on respect and freedom for the individual. The management team and staff are resolutely committed to these values and strive to enable their residents to live as independently as possible whilst maintaining the highest quality of care achievable.

The business is a privately owned family enterprise. Established in 2004, through sound management and careful planning, it has grown steadily and currently boasts nine care homes across the East of England.

The situation

The founders have ambitions to expand the number of homes in their portfolio in order to increase capacity and offer greater choice to market. At the same time, they are determined to keep Sohal Healthcare a family concern, so that they can maintain the ethos and values of the business.

When Haines Watts was first introduced to the owners, profits were strong and the business was growing. As part of their long-term plan, the owners were seeking to purchase land in order to develop modern purpose-built care homes.

The owners wanted to ensure, before purchasing land and committing to development, that the business was structured tax efficiently and that any transactions were undertaken with tax optimisation in mind.

How we helped

Initially, we advised on a restructure of the businesses to achieve a better tax position and provide a solid basis from which Sohal Healthcare could expand it’s business. We also put in place a plan to forge stronger relationships with the company’s banks so that the funding needed for future development would be available to the business.

Our ability to bring together a team of specialists has enabled the business to meet its regulatory obligations with confidence while accessing tax reliefs and providing confidence to lenders.

Since the initial objectives were set, Haines Watts has advised the owners across a wide range of other matters, which collectively have helped the owners achieve their ambitions with greater certainty. This support includes, but is not limited to:

Due diligence on potential acquisition
Capital allowances claim on property
Structuring of the build of new care home in order to reclaim VAT
Cash flow projections
Land remediation claim
Exit options
Personal tax and wealth planning
Share restructures
Implementation of new accounting standard FRS102 and policies

Results

The relationship between the company and its lenders is very sound. The directors now have a clear understanding of what lenders are looking for and the financial information they need in order to inform funding decisions. The directors have quality financial information readily available when applying for funding. At the date of writing, recent funding rounds have been successful. This includes new loans in excess of £5M to fund the company’s first purpose built care home. Land has also been purchased for a second purpose built care home.
The strong relationship forged with the bank has proven vital for supporting the business through the Covid-19 pandemic.
The structuring advised on for the purpose built care homes will result in substantial savings. At the date of writing this being £400K, and expected to increase substantially.
The capital allowances and land remediation claim on the care home resulted in accelerated tax savings for current and future years of £375K.
The implementation of the new accounting standards and a policy review meant accelerated tax allowances were claimed of £80K in year one and benefits for future years of £40K.
The share restructure and personal tax planning has also given both the shareholders and the businesses more flexibility to be tax efficient, whilst leaving healthy reserves in the company’s bank account for future project developments.