Business sale part for cash part for shares
H&W each own 50% of ltd co. Accepted deal for £80k cash & 5% shares in unquoted purchasing co between them plus jobs with purchasing co for both at a decent salary.
Entrepreneurs relief will be available as they meet the conditions, but what about business asset rollover relief on the portion related to the new shares? My initial thought is not as they will each only have 2.5% of the newco, but then I think that they're not getting cash so how can they be expected to cough up CGT?
Also there has been no formal valuation on purchaser so how to value the 5% total shares in that company? Clients, without my input!, have 'valued' the 5% at approx £100k and verbally accepted the deal.
So my questions are
1. How do I determine the value of the shares they are accepting, does it need a formal valuation?
2. Would business asset rollover relief be available on the shares part of the consideration?
3. They are asking about splitting the gain over two tax years to get two annual CGT exempt amounts however as I understand it, it is the point at which the contract becomes unconditional that is the tax point and therefore unless they have two separate contracts a month apart, this will not work. Surely there must be anti-avoidance measures to stop this, and HMRC would argue that it was in fact one sale.
I realise I need to get in contact with my tax helpline about this as it is an area I've not dealt with recently but your guidance is very much appreciated.
Thank you in advance for any input.
- Payments on account coded out?? 266 1
- VAT on stock sold at a loss 54 2
- Any Scottish members out there? 8,944 335
- Late filing penalty for personal tax return. Reasonable excuse 288 9
- VAT registration for self employed dentist??? 217 7
- Mortgage deposit Gift 371 17
- What should I do for 'free' 543 6
- Declined for business bank account 471 7
- Negativer Payslip Request 216 3
- Outsourcing iXBRL Tagging 228 10
- where has the honest passion to help gone..??? 653 14
- Family loan 1,150 16
- Getting VAT right for a sole trader pilot 142 5
- FIFA game and making money 1,217 12
- Use of home for storage 253 5
- App recommended by HMRC for record keeping 1,223 11
- Anyone out there with charity accounts experience 239 10
- Amending Share Capital 181 6
- Loan to a related company 337 14
- Being Tax relevant 556 7
- Raiders of the Lost Tax File 1,172
- Chartered Accountant in County Down N.Ireland 394
- IPP (International Pension Plan) income 308
- National Insurance 302
- valuation of intangible asset FRS10 and FRS20 256
- Cass 5 FCA Client Money Software recomendation 229
- Unnecessary S9A Enquiries 225
- Non Resident 208
- Franchise income and costs 195
- Hands on experience of Digita 136