With regard to the sale of a business (asset sale) and in particular capital allowances. Can you confirm my understanding is correct in respect of the below scenario please?
My client is the purchaser in this instance, the assets consist of goodwill and P & M. They have initially agreed an overall value for the business which of course incorporates both.
P & M is machines (company is an engineering co), surely the price allocated to P & M is disposal proceeds for vendor (which may create BA/BC) and subject to AIA (assuming limit not exceeded) for the buyer as it is not fixed P & M and not subject to any possible elections?
The vendor's accountant disagrees!
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The vendor's accountant disagrees!
About what? Does the vendor’s treatment affect your client absent any joint election, etc?
The sale documentation really should identify the values of what is being sold.
But selling agent usually interested only in the combined total.
Were there solicitors involved?
Is vendor treating the total as goodwill?
I'm guessing before, from the tenor of the OP.
I would be mentioning to the vendor that, if it were me buying an asset complete with latent tax relief for £1000, I'd only be prepared to pay £800 for the same asset without tax relief.
So the purchase price would need adjusting downwards.
Were any other assets acquired? eg stock, debtors.
Should any part of the consideration be allocated to them?
CAA 2001, s 265 isn't negotiable IMO.
OP: Why not refer the vendor's accountant to some legislationy stuff. It's irrefutable.