If you’re the CFO of a Hospitality group, chances are your corporate structure didn’t start life as a pristine, perfectly engineered diagram on a whiteboard.
More likely, it’s the product of years of incremental growth, a mixture of organic expansion, one-off acquisitions, and the occasional opportunity you had to seize quickly before someone else did.
At the time, these decisions made sense. They allowed you to grow without slowing down. But the result? A patchwork of entities, VAT groups, property-holding companies, and dormant subsidiaries that don’t always fit together neatly anymore.
And that’s where the quiet risk lives.
When complexity turns into cost
Many CFOs think of group structure as background admin. It’s there, it works (most of the time), and the team knows how to navigate it. The trouble is, that familiarity can hide inefficiencies and exposures.
We’ve seen VAT groups that bear little resemblance to how the business actually trades today, leading to irrecoverable VAT costs and unwelcome HMRC attention.
We’ve seen losses stranded in companies that no longer generate revenue, meaning tax relief you could be using to reduce Corporation Tax elsewhere is effectively locked away.
We’ve seen exit plans disrupted by tax-inefficient structures that create unexpected liabilities, delay due diligence, and ultimately reduce the value realised by shareholders.
These aren’t edge cases. They’re common enough that most Hospitality CFOs will have at least one lurking structural issue, whether they’ve spotted it yet or not.
Why the cracks appear when the stakes are highest
Here’s the thing: structural weaknesses rarely show themselves during normal operations. You don’t notice them when you’re busy running restaurants, managing staff turnover, or rolling out new menus.
They appear during moments of change.
- Refinancing: Lenders demand clarity on ownership, intercompany debt, and security positions.
- Restructuring: Moving assets or consolidating entities can trigger tax charges if not planned with the right reliefs in mind.
- Exit events: Investors and buyers scrutinise every layer of the group, and “messy” structures can become bargaining chips in their favour.
By the time you’re in these situations, time isn’t on your side. The choices you make are reactive, and the costs, both financial and reputational, are higher.
Questions to ask now, not later
If you want to test whether your structure is working for you or against you, ask yourself:
- Would an external buyer see this as clean, efficient and low-risk?
- Are there dormant companies still creating compliance costs and potential liabilities?
- Could you unlock trapped tax losses with a smarter configuration?
- Do your VAT groups still reflect how your operations actually run today?
If the honest answer to any of these is “I’m not sure,” you already have your first red flag.
The business case for an early review
Reviewing your group structure before a trigger event isn’t just about avoiding tax pitfalls, it’s about protecting value and freeing up future options.
Here’s what proactive CFOs gain from an early review:
1. Cleaner financials: Consolidated reporting becomes faster and less error-prone when the structure mirrors operations.
2. Stronger tax position: Opportunities to offset profits with group losses, optimise VAT recovery, or structure property ownership more efficiently.
3. Investor confidence: When you can hand over a clean group diagram and supporting tax analysis, due diligence becomes a box-tick, not a barrier.
4. Reduced operational drag: Fewer companies mean fewer accounts to prepare, fewer filings, and less wasted team time
An illustration
Imagine a Hospitality group that has grown rapidly through multiple acquisitions over eight years. On the surface, performance looks strong: revenues are rising, margins are steady, and the brand portfolio is expanding. But beneath that growth, the structure is tangled. Some properties sit in trading entities, others in separate Special Purpose Vehicles and VAT groups have been patched together without review since year three.
Now picture the CFO preparing for a refinancing round, only to have lenders raise concerns about intercompany balances and property security, putting the refinancing timeline at risk. By untangling the group, consolidating dormant entities, and reorganising VAT groups, the business could reduce compliance costs by 15%, unlock trapped losses, and provide lenders with the clarity they need. The result? The refinancing proceeds on schedule and on more favourable terms.
How to approach a review
If you’re ready to take a fresh look at your group structure, here’s a simple approach:
1. Map it out visually
Start with a current, accurate diagram of every entity, who owns what, and how each company fits into the VAT and Corporation Tax position.
2. Overlay the operations
See where trading reality doesn’t match the legal or tax structure. This is often where inefficiencies hide.
3. Identify quick wins
Dormant company dissolutions, loss utilisation opportunities, or VAT group adjustments can deliver fast value without major disruption.
4. Stress-test against scenarios
Run your structure against future events: sale of a property, disposal of a brand, refinancing, or investment. Where do the risks or costs spike?
5. Engage specialist advice
Especially in Hospitality, where property and trading assets mix, a joined-up view across tax, legal, and operational strategy pays for itself.
Don’t wait until it is too late
The biggest mistake CFOs make with group structures isn’t complexity, it’s prioritising the matter when there is a lot on your plate. If your Hospitality business is growing, diversifying, or refinancing, the odds are your structure needs to evolve too.
Because here’s the truth: you can’t retrofit efficiency and simplicity under pressure. By the time a deal, a lender, or a buyer is asking the tough questions, your room for manoeuvre is gone.
A clean, well-thought-out group structure is more than a compliance exercise. It’s an asset in itself, one that protects value, unlocks opportunities, and gives you, your board, and your investors confidence that the foundations are solid.
Strengthening your structure with My Tax Partner
The challenges explored here – tangled entities, VAT group inefficiencies, and refinancing risks – are exactly the kinds of issues My Tax Partner is designed to address. Acting as your embedded strategic Head of Tax, we help hospitality CFOs take a proactive view of group structures, ensuring they support growth rather than slow it down. From consolidating companies to optimising VAT and Corporation Tax positions, we give you the clarity and confidence that investors, lenders and boards expect.
With regular agenda-led reviews and deep sector knowledge, My Tax Partner helps you spot risks early, streamline complexity, and free your finance team to focus on driving performance. Instead of firefighting under pressure, you gain a structure that is clean, efficient and exit-ready, turning tax from a hidden risk into a foundation for future opportunity.
If any of the above points have struck a chord, reach out and let’s talk. And if there is an issue, we’ll tackle it head on. Find out more: My Tax Partner
