Selling Ltd company complications

Looking for tax advice for company sale a year after incorporation

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Evening!

I have a client who set up in business 4 years ago and has rapidly expanded since then. The sole trader business was transferred to a limited company on 1 March this year, with the sole shareholder & director being my client. He's now told me he's bored and wants to sell the whole thing, so I have at least encouraged him to wait until 1 March 2019 to qualify for entrepreneurs relief. He has a potential buyer, one of his employees.

We are waiting for a business valuation, but I'm still not quite happy with the way the transfer to the company happened. It hasn't been finalised yet, as I had some loose ends to tie up from pre-incorporation. Now he wants to sell, it's leading me to question some of the ways I treated things in the sole trader accounts/tax returns, especially capital allowances and his capital account. I'm getting very tangled up in the best way to present his SA return to Mar 18, whether I should go back and resubmit the 16-17 return changing the capital allowances claimed, and the best way to transfer everything to the company to minimise his tax position and the company's.

What I'm really after is someone who knows this stuff in detail, who is willing to talk through the finer points and advise me where to go with this. Of course happy to pay for the advice. At the very least a pointer towards some helpful online resources would be great!

Thank you!

Sheila

 

 

 

Replies (5)

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By Tim Vane
05th Nov 2018 22:15

Excellent idea. Please advise what type of time machine you are using to revise the facts? Is it the standard DeLorean (a lot of those about lately) or something more exotic? Watch out for those Morlocks!

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By frankfx
05th Nov 2018 23:34

Speak to Arthur Weller as first port of call.

Modest fees for excellent insight/ oversight.

Given the overall transaction fees his costs will be a mere droplet .

Once again a question is presented on AWEB without any numbers for us to chew over .

If numbers are huge , what's huge (?), then given what you have said ,using this forum, you may want to retain some on -going professional support throughout the process.

In the meantime avoid or preferably evade rewriting history.

Other side's accountants may want to see business history ,pre and post incorporation as part of due diligence.

If any doubts are raised , your actions may be questioned. May alter the deal price?

Smoke fire, fire smoke. It happens .

Then , you may want a Delorean for personal use.

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By Tax Dragon
06th Nov 2018 07:23

I don't often agree with frankfx - but then, I often don't know what s/he's going on about. This time I get it... and agree. You may be able to change the tax treatment of past events by making timely elections; you can't (and should not try to) change the past events themselves.

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Replying to Tax Dragon:
RLI
By lionofludesch
06th Nov 2018 08:03

Agree with taxdragon. You're probably still in time to change your Capital Allowances claims but any attempt to change the events themselves is fraught with danger.

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By greenbunnygirl
06th Nov 2018 10:27

Thanks for the constructive replies. Maybe I wasn't very clear - I'm not looking to change events/facts, but there are choices over how some events are treated. In fact as both the 17-18 SA return and the transfer to the company are still unfinalised, then it's not even changing, more a case of making the best choices.

The numbers aren't huge, and apart from the guys doing the ltd co valuation, I'm so far the only professional involved, so we haven't really incurred much in the way of fees.

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