What is the best way to deal with “father wants to pass the grocery shop to his son”?

What is the best way to deal with “father wants...

Didn't find your answer?

Hi all,

A prospective client wants to see me to discuss a possible move from his old accountant to me. His old accountant is really old and wants to retire or pass the clients to his daughter. But the client would like to come to me.

Case: Father is the owner of the shop at the moment. This is a small grocery shop. Father wants to close the shop from his name and make a fresh start for his son.

Q: Why doesn’t he pass it on to his son?

Answer: His old accountant think it would be good for him to close it in his name and the son starting it fresh registering self-employed.

So in this situation, I believe we should prepare the final accounts at closing date and complete all necessary paperwork and after that we deregister the father from self-employed.

Then, we registrar the son as self-employed and register him for PAYE employer, VAT reg if necessary etc.

Do you think it will be better for son to registrar a ltd company and operate under that with a trading name?

I know it will not be that simple, there will be more complication than that. Could you please discuss the possible problem I might find on my way to this process completion? Or please give me some advice from your experiences. Any discussion to this would be helpful and much appreciated. You can also advise me about the fees I should charge etc.

Many thanks for your time and effort.

Regards,

MSB

Replies (4)

Please login or register to join the discussion.

avatar
By geoffwolf
20th Oct 2010 11:05

Yourproposed method will work.

However you will need to cosider various tax matters and others.

Is the shop rented?

landloards peermission for transfer of the lease would be required.

If the shop is owned will the son be paying rent? or is a freehold being transferred?

Other matters,  e.g Inheritance tax

Capital Gains Tax

Stock values

Fixed Asset values

VAT is it registered  will the son have a separate VAT no?

etc etc.

 

I would suggest that this forum will not be sufficient for all the ground to be covered.

Without knowing much more about the matter it isb impossible to advise whether the son should trade through a LOtd company

Thanks (0)
avatar
By MoneySavingBank
20th Oct 2010 11:54

The shop is leased

Thank you very much Geoffwolf for your reply.

I am not very sure about all the questions you have asked. But so far I understand from a quick convesation with the father:

The shop is leased. What if he doesnt want to transfer the lease. Lease will stay in fathers name but the son will pay the payments. So I am not very sure about the Lease Transfer.Father started the shop about a year and half or two ago, so I dont see any major CGT arising from there.VAT Reg: Not sure about that. But we can dereg. VAT from father when we cease the business and reg. son when we process his business if necessary. Yes, we are talking about a seperate VAT reg no

I hope these info will make it more clear.

Regards,

MSB

Thanks (0)
avatar
By cathygrimmer
20th Oct 2010 11:56

What's your advice?

Also - as the new accountant, what's your advice as to whether closing down and restarting is the best option? My apologies if you have already decided that you agree it is the best option, given consideration of the tax issues, costs, legal issues, etc but your post suggests you might just be following the previous accountant's suggestion.

You will need to do some number crunching to see whether operating through a limited company would be tax-efficient - although, of course, there are non-tax issues to consider as well.

If the previous accountant recommended a particular course of action, perhaps he has already reviewed all this in detail before he advised the client (I would certainly hope so!). Probably best to ask for copies of relevant correspondence etc if you don't already have them rather than charge for the same work again.

Cathy

[email protected]

 

Thanks (0)
avatar
By MoneySavingBank
20th Oct 2010 12:20

discussions help me to think different

Hi Cathy,

Thanks for your interest in my post. I really appreciate the questions and answers and discussion in forum.

These sort of discussions help me to think differently and see how others seeing things that I am dealing with.

I haven’t decided anything yet and I am trying to find the solutions (Alternatives) and getting ready for the meeting. You can say this is my preparations.

Regarding the previous accountant recommended a particular course of action; I suspect this is just a general conversation not any solution based on analysis.

Thank you again.

Regards,

MSB

Thanks (0)