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Completion accounts and accountancy fees

There is a sale of company shares and under the sale and purchase agreement completion accounts have to be prepared. The seller is responsible for paying accountancy fees for the completion of the accounts but is this a personal liaiblity of the shareholders, or should it be treated as normal accounancy fees in the limited company.
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03rd Sep 2008 18:35

Yes, it is a seller obligation
If the agreement specifies that the seller is to prepare the completion acounts (and it sounds as if that is the case), then in the absence of anything to the contrary in the SPA, the costs of doing so are for its account, not the target company's. NB Your message is not entirely clear - is the seller a legal entity (as indicated by your use of "seller" in the singular), or is there a group of individual sellers who are shareholders in the target company? The costs should be borne by the seller(s) as defined in the SPA.

NB this is a commercially reasonable position: completion accounts are for the benefit of the buyer and seller, as they drive an adjustment to the purchase price (usually). The completion accounts are not of any direct relevance or benefit to the target company itself, and therefore it does not make sense for it to bear the cost.

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22nd Aug 2008 14:14

Yes, but
Is it possible to persuade the purchaser to shorten the company's next accounting period back to the completion date? The completion accounts would then be the statutory accounts and the accountancy fees could be charged to the company and included in the accounts. Provided that the company's accounting date has not been extended within the previous 5 years, the purchaser could then extend the following accounting period to a date of his choice (and would have to do so if the company is becoming part of a group).

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By Anonymous
22nd Aug 2008 13:38

Completion Accounts
I believe that the Completion Accounts should not include the cost of the preparing those accounts and that the invoice for the work in preparing them should be settled/met by the shareholders individually and not the company.
The settling of the bill personally comes down to a VAT point which our legal team always picks up on that the VAT can not be claimed on the invoice for the Completion Accounts within the company. The solicitors for the other side are always in agreement once the point is presented.

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