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Claiming advisory fees on business asset sale

Claiming advisory fees on business asset sale

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I have a Ltd Co client who sold income generating websites to another company. Throughout the two years prior to the sale the company engaged the services of a consultant who provided advisory services in order to maximise the profitably of the busienss which subsuently led to to the succesful sale. The consultant carried out signifcant amount of work prospecting for buyers for the business and assiting the due dilligence work on the sale and as a result of a seperate agreement with the company the consultant received a six figure sum when the deal went through. Normally the consultancy fees would be a normal trading cost of the business but the large fee related to work purely on the sale and therefore would want to put this against the asset sale. On reviewing the CGT manuals the  legislation appears to allow very few professional costs (legals and accounting fees specifically working on CGT aspect). This payment to the consultant is specifically relating to the sale and the consultant would not have recieved any money if the sale had not gone throughtherefore I would like to think this could be offset against the gain. The business incurred a great deal of costs leading up the sale and therefore has a trading loss in the year of the sale therefore very relebant where we attibute those costs. Confirmatont that the costs could be shown for CGT puposes would be appreciated.

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By Accountant A
18th Sep 2018 11:01

Have a look at Chapter III of Taxation of Chargeable Gains Act 1992.

PS I thought it was the purchaser who needed to carry out due diligence, not the seller? Have I got that the right way round?!

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Replying to Accountant A:
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By Avant-Garde54
18th Sep 2018 11:10

Thanks for your comment. There was a great deal of work involved going over the income generated by the business to in order to confirm all the figures supplied were legitimate and the consultant took a very active involvement in helping with this which helped to push the deal through.

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Replying to Accountant A:
By Ruddles
18th Sep 2018 11:19

Accountant A wrote:

Have a look at Chapter III of Taxation of Chargeable Gains Act 1992.


Chapter III of which Part?
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Replying to Ruddles:
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By Accountant A
18th Sep 2018 13:46

Ruddles wrote:

Chapter III of which Part?

That's his homework.

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Replying to Accountant A:
Hallerud at Easter
By DJKL
18th Sep 2018 11:22

With assets sales in general (albeit in my case mainly property, but we have also recently sold a ship) the sellers often do nearly as much jumping through hoops as the purchaser re producing all the bits and bobs that satisfy the purchaser's diligence; the number of extra reports we have been asked to produce over the years is stunning (and expensive)

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