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Legal fees on the sale of a limited company

payment in respect of legal fees on the sale of shares by individual shareholder

A shareholder and director is in the process of selling all of the shares in his limited company. The transaction has been prolonged and the shareholder has received an interim invoice relating to the legal fees connected to the sale of shares. The shareholder would like to put the invoice through the company. Can this be done? the invoice is made out to to the shareholder in his personal name as opposed to the company.    

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12th Feb 2019 10:07

Yes the company can pay it if that is what it and its shareholder want - it's a free country - but if you are their accountant you will want to make sure that they are fully aware of how the company is going to account for it and what the tax implications are going to be for both the company and the shareholder.

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By DJKL
12th Feb 2019 11:02

One other caveat- given he/she is selling the shares is there any restriction re the share sale agreement re what the company may do in the interim, warranties etc?

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By RobertQ
to DJKL
12th Feb 2019 11:04

There are a heap of the usual warranties. There will be no interim period as the buyer will acquire all the shares at completion.

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By DJKL
to RobertQ
12th Feb 2019 11:19

The interim from now (paying bill) to completion.

If the fees are significant the buyer acquires the company post the fees being paid, if this is a tax issue it has been thrust upon the buyer (subject to warranties)

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By RobertQ
to DJKL
12th Feb 2019 11:23

As the deal is not yet done, I don't believe there is any restrictions at present.
I will have to ask him to check the position on the warranties and impact on the warranties if payment of the interim invoice is made through the company

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