Business consulting services
Our business consulting services can help you improve your operational performance and productivity, adding value throughout your growth life cycle.
Business process solutions
We can help you identify, understand and manage potential risks to safeguard your business and comply with regulatory requirements.
Business risk services
The relationship between a company and its auditor has changed. Organisations must understand and manage risk and seek an appropriate balance between risk and opportunities.
As organisations become increasingly dependent on digital technology, the opportunities for cyber criminals continue to grow.
Forensic and investigation services
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
Mergers and acquisitions
Globalisation and company growth ambitions are driving an increase in M&A activity worldwide. We work with entrepreneurial businesses in the mid-market to help them assess the true commercial potential of their planned acquisition and understand how the purchase might serve their longer- term strategic goals.
Recovery and reorganisation
Workable solutions to maximise your value and deliver sustainable recovery
Transactional advisory services
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
We provide a wide range of services to recovery and reorganisation professionals, companies and their stakeholders.
The International Financial Reporting Standards (IFRS) are a set of global accounting standards developed by the International Accounting Standards Board (IASB) for the preparation of public company financial statements. At Grant Thornton, our IFRS advisers can help you navigate the complexity of financial reporting from IFRS 1 to IFRS 17 and IAS 1 to IAS 41.
Audit quality monitoring
Having a robust process of quality control is one of the most effective ways to guarantee we deliver high-quality services to our clients.
Global audit technology
We apply our global audit methodology through an integrated set of software tools known as the Voyager suite.
Corporate and business tax
Our trusted teams can prepare corporate tax files and ruling requests, support you with deferrals, accounting procedures and legitimate tax benefits.
Direct international tax
Our teams have in-depth knowledge of the relationship between domestic and international tax laws.
Global mobility services
Through our global organisation of member firms, we support both companies and individuals, providing insightful solutions to minimise the tax burden for both parties.
Indirect international tax
Using our finely tuned local knowledge, teams from our global organisation of member firms help you understand and comply with often complex and time-consuming regulations.
Innovation and investment incentives
Dynamic businesses must continually innovate to maintain competitiveness, evolve and grow. Valuable tax reliefs are available to support innovative activities, irrespective of your tax profile.
Private client services
Our solutions include dealing with emigration and tax mitigation on the income and capital growth of overseas assets.
The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public
Tax policies are constantly evolving and there are a number of complex changes on the horizon that could significantly affect your business.
Outsourcing Changes to the Outsourcing legislation, specifically when offshoringSignificant changes to the dynamic of the financial services sector in recent years have shifted the paradigms in how we work. The increased digitisation of the workforce, changes in business models, globalisation, and remote working capabilities have led to a new approach to the delivery of services.
Asset management Inflation and tax planningThe recent onset of rapid inflation is an unwelcome development that is having a widespread impact on US businesses and tax planning.
Business combination or asset purchase?
Should the purchase of an investment property be accounted for as a business combination or as an asset purchase? Our ‘IFRS Viewpoint’ series provides insights from our global IFRS team on applying IFRSs in challenging situations. Each edition will focus on an area where the Standards have proved difficult to apply or lack guidance.
What's the issue?
When should a purchase of investment property (or properties) be accounted for as a business combination, and when as a simple asset purchase? This is an important issue because the IFRS accounting requirements for a business combination are very different from asset purchases.
Distinguishing business combinations and asset purchases can also be challenging for many other types of transaction and judgement is often required. This is particularly the case when investing in assets that generate cash flows on a standalone basis such as retail outlets and hotels. We focus here on investment property but the underlying arguments apply more broadly.
Our view on the purchase of investment property
The purchase of investment property (or properties) is a business combination if the acquired set of assets and activities meets IFRS 3’s definition of a business (IFRS 3 Appendix A and supporting guidance). That guidance explains that a business consists of ‘inputs’ and ‘processes’ applied to those inputs that together have the ability to create ‘outputs’ (IFRS 3.B7).
Determining whether a purchase of investment property is a business combination therefore requires a careful evaluation of the transaction and of what has been acquired (the ‘acquired set’). This often requires judgement.
When purchasing an investment property the ‘input’ part of the definition is always met because the property itself is an input. If the property has in-place tenants and leases, the ‘outputs’ part is also met because rental is an output.
Even with no in-place leases at the purchase date, a property that is substantially complete and available for letting may have the ability to earn rentals and therefore be capable of creating outputs. In these situations, deciding whether the acquired set is a business depends on whether any ‘processes’ are transferred and, if so, their nature and significance.
When an investment property has tenants, various services must also be provided, some of which may be specified in the leases. These and other services (or contracts for services outsourced to third parties) may be transferred to the buyer on purchase, in which case they are part of the acquired set. In our view, however, many basic services commonly associated with investment property are administrative functions that do not meet the definition of processes (IFRS 3.B7). Examples include: rent collection, basic tenant administration, basic maintenance, security and cleaning.
By contrast services that go beyond administrative matters are likely to be ‘processes’. Processes typically involve specific knowledge or skills and can be significant to the decision to purchase the property(ies) and/or its value. The presence of processes in the acquired set is indicative of a business. However, the presence of a relatively unimportant process may not be enough – for example if other, more important processes are excluded.
Accordingly, in our view the transfer of some services does not necessarily mean that the acquired set is a business. As a general indication, our preferred view is that:
- the purchase of a property or properties with or without tenants in which no services are transferred should be accounted for as an asset purchase
- the purchase of a property or properties with tenants and with the transfer of only administrative-type services should also be accounted for as an asset purchase
- the purchase of a property or properties with tenants and more sophisticated services/activities should generally be accounted for as a business combination (in accordance with IFRS 3).
However, we also acknowledge that some commentators interpret IFRS 3’s definition of a business in such a way that each of these scenarios could be a business combination. This is explained further in the full report available to the right hand side of this page.