Does anyone have any information on BADR?
Now I am selling my shares in my company and resigning due to dispute with my partner . I am 50% shareholder and the business will be continuing.
I however want to incorporate a new LTD solo and there will be 0 restrictions in the SPA.
Will I pay 10% or 20% on my gains ?
I am getting so much conflicting information and not getting anywhere .
Hope some savvy accountant can help :-)
Replies (23)
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This is the legislation:
https://www.legislation.gov.uk/ukpga/1992/12/part/V/chapter/3
You can find a chartered accountant here:
https://www.icaew.com/about-icaew/find-a-chartered-accountant
Hi David
Thankyou for your reply this evening. I can't seem to see anywhere where it gives me the actual information I'm after in regards to what I am allowed to do :-s
Sounds like you need an accountant. Assume there’s some money at stake for you so guess a modest fee to access competent professional advice will be a good investment.
You need your own accountant as there are negotiations on the exit to be done.
If you start another company, with similar trade, then BADR should be part of that discussion with your accountant
… we have met with a few. Each one says different.
Didn’t think there were more than 2 options in answer to your question so interesting to hear there are “a few”.
Go with a decent professional accountant. They’ll be insured so if they give you incorrect advice you have some comeback.
If you get the wrong steer on here and act on it, that’s your risk.
Who is we?
If you mean your current fellow sharehoder you might consider that having your own distinct accountant and solicitor, only acting for you, could be desirable.
If they say what you want them to say, as you claim, then get new ones. You need to choose your professional advisors more carefully.
Who's buying the shares? (@David Ex if you think about this it could explain why there are more than 2 possible answers to the OP's questions.)
Currently you haven't engaged an accountant. Any comments you've obtained thus far don't really count for much. (A bit like any reply you might obtain in here that looks a bit advisory. It's really not.) If there's a lot of money at stake, invest a bit of time finding a good accountant that can cope with transactional stuff of this type (not all can) and involve him or her with the deal before you sell and resign.
Why do you or all these prospective accountants think that BADR may not apply? I take it you have checked the conditions.
You won’t get a definitive answer until you sign up and they go through all the facts.
I wouldn’t go with any of these accountants then. Did the first accountant say that 20% could apply or that income tax rates could apply if there was a liquidation?
(This is hypothetical given there is no liquidation but you seem hung up on BADR applying and the answers you have been given seem to address whether the anti-avoidance rules would result in income tax treatment and not capital treatment.)
I don’t think anyone knows yet whether BADR could apply to the sale of a company you have just set up. This relief will probably no longer exist by the time we all retire.
You asked for advice and the advice was to go with a specialist.
I ...want them to be certain on the advice they are giving me
Them give them all the facts and documentation. Or at least answer their questions and give them what they ask for.
For all I know, this was a POOS 4 years after the company was set up and CGT isn't even in point. (That's just a for instance. Which I'm using as an example [of the importance of the facts] because I don't think it's what actually happened - it's better that way, imo.)
If the company was to be liquidated and you set up a new business to conduct a similar trade then something called the TAAR would, if it applied (there are further conditions to be met), subject the proceeds to income tax, and as BADR is a CGT relief, it wouldn't be of any relevance. That is to say the 'choice' is between IT & CGT not between BADR and normal CGT rates.
But as there is to be no liquidation the TAAR shouldn't apply, although HMRC aver (probably wrongly) in Spotlight 47 that they can apply the TAAR to a sale and give the taxpayer a big fine to boot.
The TAAR is unlikely to apply as a) HMRC are unlikely to assert that it applies in this case and, in any event, b) condition D of the TAAR is not satisfied - the new co is there for commercial reasons and is not part of a tax avoidance scheme.
I repeat the advice of others - get a good accountant.