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Surplus on acquired assets under SPA ? Taxable

A Ltd buys undertaking from B Ltd under SPA. Assets realise more than anticipated. ? tax treatment

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A Ltd traded for many years, and accumulated significant cash. In March 2016  subject to  a detailed SPA it sold its entire undertaking other than accumulated cash but including all receivables, to an unconnected company B Ltd.

A Ltd was then put into Members Voluntary liquidation, and the accumulated cash paid to the members of A Ltd before 6th April 2016

In the event  over the following years those receivables[including for example rates recoverable ] realised  considerably more than the figures listed  in the SPA and were collected by the liquidator of A Ltd

How is the surplus - arising out of the terms of the SPA and now  payable by the liquidator of A Ltd  to  B Ltd - taxable in the hands of B Ltd?

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By The Dullard
27th Nov 2020 17:49

CTA 2009, Pt 3, Sch 15 didn't help?

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Replying to The Dullard:
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By Montrose
28th Nov 2020 11:43

Assuming you have in mind CTA 2009 Part 3, Chapter 15, that refers to post cessation receipts - in this case it is A Ltd which ceased trading, but the query relates to B Ltd.

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Psycho
By Wilson Philips
27th Nov 2020 18:23

If all receivables were transferred to B how come the cash ended up in the hands of the liquidator of A? Or is A acting as collection on behalf of B?

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Replying to Wilson Philips:
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By Montrose
28th Nov 2020 11:39

There was no novation of the receivables , so the liquidator of A Ltd pursued the recovery with the obligation to account to B Ltd,.

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Replying to Montrose:
Psycho
By Wilson Philips
28th Nov 2020 14:54

So why did you say that A transferred the entire undertaking, including all receivables?

In any event, I would suggest that B simply reflects the over-recovery as a trading receipt. In the same way that one would treat recovery of a debt against which a bad debt provision had previously been made. And vice versa of course, if the receipt proves to be less than the receivable acquired.

BTW, you need to correct your sub-heading

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