Have You Considered What You Are Selling: Shares or Assets?
Essentially, when selling a business, you will either be selling the assets and trade, or the share capital. The characteristics of each scenario are set out below :-
- Traditionally simpler and less risky for the purchaser as you are selling a clearly defined asset(s), not ‘warts and all’
- If the sale includes property, LBTT or SDLT will apply
- With simplicity, comes potentially lower costs as the professional teams on each side have a lower risk to manage
- Possible double taxation for the seller where they sell assets within a company then have to dispose of their shares
- Other tax considerations, including capital allowances, VAT implications etc.
- The seller sells everything which can add significant risk for the purchaser which can in turn lower the selling price and drive up the professional costs associated with the sale.
- Stamp Duty at 0.5% on the sale of shares, payable by the purchaser
- Traditionally lower tax for the seller but seller must provide more warranties to the purchaser
- Normally takes much longer than an asset sale
What is our role?
Our taxperts will work with you to help structure the right deal for you and also to negotiate with the purchasers on your behalf. This advice can be invaluable and can ensure you are fully aware of the tax cost of the transaction before agreeing a sale.
If you are thinking of selling your business and would like to discuss your circumstances with sector leading experts, then please contact our Transaction Tax team today.
You can read our advice on ‘How to retain assets’ here.