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Where Taxpayers and Advisers Meet
Tax on not sold assets
I'm considering selling my business, but I'm concerned because it appears there will be a significant tax liability on the company’s tangible assets. What I don’t understand is this: I would only make a capital gain if those assets were actually sold. However, in a business sale, the assets won’t be sold individually — the buyer will simply take them over to continue running the business. So I’m unsure why a tax charge would arise on assets that aren’t being sold separately.
Re: Tax on not sold assets
1. Are you selling your shares in the company or is the company selling its assets?
2. If the former (as I would expect), why do you think there would be a liability on the company's assets?
2. If the former (as I would expect), why do you think there would be a liability on the company's assets?
Re: Tax on not sold assets
Thank you for your quick reply.
It's a share sale. The asset tax liability was raised by the M and A accounting firm the buyer is using. Forgive me for my ignorance but I'm totally baffled by accountancy terminology or practice. I think it was something to do with the way we chose to value the company assets, I believe we had a choice of two methods, maybe we choose the wrong one.
Thank you again for your help
It's a share sale. The asset tax liability was raised by the M and A accounting firm the buyer is using. Forgive me for my ignorance but I'm totally baffled by accountancy terminology or practice. I think it was something to do with the way we chose to value the company assets, I believe we had a choice of two methods, maybe we choose the wrong one.
Thank you again for your help
Re: Tax on not sold assets
The only tax liability will be on you personally based on your disposal of your shares. The company will not have a liability.
Re: Tax on not sold assets
I will have a personal tax liability when I sell the business.
But tax liability on the tangible assets, is bill of tens of thousands of pounds, which makes a big dent in the final sale price of the business. The thing that I don't understand is the tangible assets are not being sold but remains with the business. They are not being sold, so how can it be classed as a capital gain?
But tax liability on the tangible assets, is bill of tens of thousands of pounds, which makes a big dent in the final sale price of the business. The thing that I don't understand is the tangible assets are not being sold but remains with the business. They are not being sold, so how can it be classed as a capital gain?
Re: Tax on not sold assets
Is it an actual limited company you are selling? Or are you a sole trader?
If it's a company, then we don't know either. It sounds as though you need to get some proper advice.
If it's a company, then we don't know either. It sounds as though you need to get some proper advice.
Re: Tax on not sold assets
We are a limited company.
It's good to know that I'm not the only one who doesn't understand the logic, of paying CGT when you are not selling the item you are being taxed on.
Do you know of any other forums I can use?
Thank you for all your help.
It's good to know that I'm not the only one who doesn't understand the logic, of paying CGT when you are not selling the item you are being taxed on.
Do you know of any other forums I can use?
Thank you for all your help.
-
darthblingbling
- Posts:786
- Joined:Wed Aug 02, 2017 9:09 pm
Re: Tax on not sold assets
You're disposing of shares, that is all you are personally disposing of. Your CGT will be based on this.
You do not own the assets in the business, the company does.
You do not own the assets in the business, the company does.
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darthblingbling
- Posts:786
- Joined:Wed Aug 02, 2017 9:09 pm
Re: Tax on not sold assets
I assume anyway.
You may be best engaging with a professional who can review all the facts rather than rely on a tax forum given this transaction is worth tens of thousands as you put it
You may be best engaging with a professional who can review all the facts rather than rely on a tax forum given this transaction is worth tens of thousands as you put it
Re: Tax on not sold assets
I think we’ve taken this post as far as we can. I’ll be following the advice given and will start looking for a tax professional. If anyone has recommendations for a reasonably priced consultant in the North East of England, I’d really appreciate it.
Thank you all for your help and guidance.
Thank you all for your help and guidance.