Looking for some advice re: LTD Co client who is selling up. The background is:
1. Client was selling their house, the purchaser of his home included the sale of his business which was valued at £50,000.
2. My client never physically received the £50,000.
3. Client has a SIPP which purchased the property from which the trade operates.
4. Client forms an LTD and trades for a number years.
5. The £50,000 is not recognised on the accounts.
6. My client now wants to sell the trade and has been offered £50,000 for it.
Initially I advised him that the money belongs to the LTD, will be taxable on the company and from there he can withdraw balance of funds after settling the debts etc. and that the original accounts would have to be redone to bring in the £50,000 as goodwill and credited to the Directors account, then he could withdraw the balance of funds from the company after tax but he is insisting the he owns the trade. He advised that the trade was never brought into LTD so the £50,000 should go directly to him as if he was making a capital disposal. This is obviously more tax advantageous.
I've never had this situation before. Can anyone advise? Can the trade purchased by the Director be separated from the trade that was carried on by the LTD? My last question makes me think no, they are one and the same but I just need some help with this.
It should be noted what the purchaser wants is actually the property, not the trade. The trade will be cease on completion on the sale. There will be 2 sale agreements, one to the SIPP who have agreed the value of the sale of the property. But who should the other sale agreement be with, the LTD Co or the Director?