My client, trading as a limited company, is about to sell the business (not shares or assets) for £200,000. There is at present no goodwill on the Balance Sheet. Is it worthwhile and/or possible to disincorporate before sale and take the sale personally and subject Capital Gains Tax thus paying tax at a lower rate?
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presume
you mean the goodwill i.e. trade of the business is to be sold without any other underlying company assets ? If so there is nothing you can do to avoid the charge in the company other than rollover relief and the gain arising will be £200k assuming 1982 does not apply.
There is a concession called disincorporation relief that does not apply here as the total market value of all assets must not exceed £100k. So if you did disincorporate first the gain would still accrue to the company under connected party rules.
How?
First, as chicken farmer says, what is he selling? I can understand not selling the shares, but the assets required to run the business are generally part of any business sale.
But more importantly, how are you proposing to get the business into the client's hands without crystallising the gain? The market value of what you are intending to sell is clearly £200,000 so disincorporation relief is a non-starter (£100,000 maximum). That is even before you consider that what you suggest is quite clearly a set of transactions without business reasons whose sole purpose is to reduce the tax due. HMRC have been able to unpick such things for years.
How indeed!
There is also the point that 'goodwill' (if that is what it really is) cannot exist in isolation from the trading activities. What exactly is it that would be sold?
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