Tax Issues on Buying and Selling Private Companies
description
Transcript of Tax Issues on Buying and Selling Private Companies
![Page 1: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/1.jpg)
www.cvdfk.com
Tax Issues on Buying and Selling Private Companies
Mike Cooper
IoD Conference 2011
![Page 2: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/2.jpg)
Overview of the sales process
![Page 3: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/3.jpg)
Share v Asset sale
Share sale
Asset sale
![Page 4: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/4.jpg)
Prior to sale: Securing the 10% tax rate!
Entrepreneurs Relief (ER) reduces the capital gains tax rate down to 10%. The main qualifying conditions are:
• company must be a “trading” standalone/parent company• shareholder must have at least a 5% holding of ordinary shares &
voting rights• shareholder must be an officer or employee of the company• above conditions must usually be satisfied for 12 months prior to
disposal of the shares
Each individual has a maximum lifetime entitlement to ER of £10million!
![Page 5: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/5.jpg)
Prior to sale: Structuring – property & trade
Shareholders
Property ring-fenced against commercial risk
Can sell property or trade
Most tax efficient
Cheapest to
implement
![Page 6: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/6.jpg)
Sellers planning
• Extracting surplus funds in advance• ER risk
• Dividends/bonuses/pensions
• Salary/dividend freezes
• Share capital reduction
• Claiming reliefs• R&D Tax Relief
• Capital Allowances
• Buy - out minority shareholders?
• Share Options
• Management Buy Outs
• Split of consideration – cash/loan notes/shares
![Page 7: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/7.jpg)
Buyers planning
• Split of consideration
• Intellectual property
• Employment tax
• Property reliefs
• VAT
• Borrowing & debt relief
• EIS/ CVS reliefs
• Due diligence
![Page 8: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/8.jpg)
Post sale: Sellers
![Page 9: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/9.jpg)
Post sale: Buyers
• Reorganise?
• Loss protection
• Claim any missed reliefs
![Page 10: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/10.jpg)
Summary
• Fail to plan, plan to fail!
• Plan now
• Financial information - accounts, CT returns – all must be real time
• CVDFK can help!
![Page 11: Tax Issues on Buying and Selling Private Companies](https://reader036.fdocuments.in/reader036/viewer/2022062409/56814e42550346895dbbb5a7/html5/thumbnails/11.jpg)
Contact
Chantrey Vellacott DFK LLPRussell Square House10-12 Russell Square
LondonWC1B 5LF
Mike Cooper Tax Partner
0207 509 920107976 709910