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HMRC clearance re contingent sales price

HMRC clearance re contingent sales price

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I have a client that owns a company that has sold its trade as an IFA business for £600k split into 3 payments , one now, one 12 months and one 24 month, the future payments are earnings based, his intention is to close the company the now defunct company, how do I get HMRC agreement to the value of the future proceeds 

 

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Hallerud at Easter
By DJKL
30th Jun 2020 12:20

How does he safely close the company with the purchaser still due to pay it in future years?

I presume the obligation from the purchaser to the company is to be passed to the shareholders, I would be wanting a really good solicitor to sort the assignment of the interest under the contract and a very switched on insolvency practitioner re its distribution to the shareholders, if this goes wrong the purchaser could just not bother paying and there would be no legal entity capable of enforcing the contract of sale.

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Replying to DJKL:
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By CW2012
30th Jun 2020 12:37

The funds are been paid into a new company, this is all agreed with the purchaser, it is clearance from the HMRC regarding the value of the future payments that I'm hoping that someone might have knowledge of, how do I go about gaining clearance

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Replying to CW2012:
Hallerud at Easter
By DJKL
30th Jun 2020 12:45

How is one company selling its trade but the proceeds are to be paid to a different company? How does that work legally, within the accounting and for tax?

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Replying to DJKL:
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By CW2012
30th Jun 2020 12:55

The proceeds have been assigned to a different company, I didnt get involved I'm not the solicitor, the sale and any profit from it will be dealt with in the owning company, I am at the point of wanting to get HMRC clearance on the value of the future payments and cant remember the route to do this, do you know.

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Replying to CW2012:
Hallerud at Easter
By DJKL
30th Jun 2020 13:07

If assigned to A N Other company surely price/consideration was considered at that point?

Company A had a right to receive x,y and z in future from purchaser, that right passed to Company B, what did company B pay company A for that right, if it did not pay what figure was used to determine value of the transfer of the right to receive?

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Psycho
By Wilson Philips
30th Jun 2020 13:23

Search HMRC for “post-transaction valuation”

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Replying to Wilson Philips:
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By CW2012
30th Jun 2020 13:46

Have done, form CG34looks to be the ticket

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By whitevanman
01st Jul 2020 10:08

Why would you need HMRC agreement? The value is stated in the sale agreement.

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Replying to whitevanman:
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By CW2012
01st Jul 2020 10:21

Because the proceeds are on a contingent basis and the selling company is to be wound up prior to the receipt of all the proceeds

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Replying to CW2012:
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By whitevanman
01st Jul 2020 10:42

Based on the info provided, the consideration is (partially) deferred, ascertainable and contingent. Generally speaking, the contingency does not affect the fact that the whole sum is taken into account at first instance. There is facility for postponement of part of the tax payment and adjustment if some part is not received.

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