We have a client who sold the shares of his company for £200,000, the client and buyer have entered into an agreement whereby rather than pay the full £200,000 now the buyer will pay £1000 per month until the payment has completed. I believe in a circumstance like this our client can contact HMRC and apply to have the capital gains payments split up over the coming years.
A problem arises however because our client has signed a declaration of solvency prepared by a solicitor whereby it states that he sold his shares to a limited company for £1.00 and at the same time entered into a loan agreement with an individual for the £200,000. The deal was structured this way because the buyer could not obtain full funding from the bank.
If he were to apply to HMRC to have CGT payments spread out (under Section 280TCGA1992) they will ask for paperwork relating to the sale being the declaration of solvency but not the loan agreement.
What do I do?