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.
- Entrepreneur's Relief - Disposal over a period of time 175 3
- Late RTI filing re SMP 101 3
- Self Help Accountancy Book for Client 159 3
- VAT registration on digital services supplied outside UK within EU 96 6
- Additional information attached to accounts 185 2
- CIS Software 115 1
- Company assets 365 16
- Can anyone recommend a fax send/receive service which I can use via email? 223 6
- MoneySoft 168 2
- Best way to advise a limited company client 75 1
- How to convert a pdf file to.. 661 10
- Payroll cessation and missing overtime 146 2
- Self assessment 152 1
- Claiming VAT 127 2
- Do you have to declare business expenditure on a personal credit card on your P11D? 1,123 15
- VAT on Acquisitions and Exempt Supplier 176 4
- Corporation tax on gains from one company to another 277 10
- HMRC website & Adobe Reader 272 5
- Basis period (2nd yr) for a partnership, please any suggestions would be really helpful 156 1
- Auto-enrolment - fact or fiction? 513 9
- Straight line write off of Purchase Goodwill ??? 504
- Has anyone been affected by the RBS payment breakdown? 479
- Is there anything wrong with this? 281
- Do subcontractors on work for residential (student accomodation) construction 267
- Uncommercial property business 243
- Apple Employees - RSU vesting and tax witheld 204
- Registering online CWF1 184
- VAT - registration needed? 181
- Zoho software in small accounting and bookkeeping practice 180
- Accrued income scheme 179