CGT selling business

[paye-help]

If I were to sell a business (100% shares in Company), 50% payment up front then 25% 1 year later and 25% 1-2 years later would the CGT go on one return or could it be spread over 2/3 once funds are received? Or must is go as share disposal date?

 

[MikeJ]

Are you transferring all the shares at once, or transferring them in stages when the payments are made?

 

[WaveJumper]

I am pretty sure you are, but take some legal advice on the sale too, who's to say after the first 50% payment you will get anything further ........ not unheard of

 

[UK Contractor Accountant]

Or must is go as share disposal date?

this if all sold in one go.

 

[paye-help]

Are you transferring all the shares at once, or transferring them in stages when the payments are made?

Share disposal in one go.

 

[paye-help]

I am pretty sure you are, but take some legal advice on the sale too, who's to say after the first 50% payment you will get anything further ........ not unheard of

I know the buyer so will be fine. But still have a loan agreement in place.

 

[MikeJ]

So effectively you're selling the company for the full value at one point, and loaning him some of the money back for a few years. I'd say it's all due in one go then.

 

[paye-help]

I have just been reading about deferred consideration CG14910 but the HMRC guidance isn't clear on how you apply/claim. Anyone on here have any idea?

 

[UK Contractor Accountant]

apply/claim

claim for what?

CG14910 is about paying CGT by installments

You may be able to pay the tax in instalments by making a claim under s.280 (proceeds in instalments) by notifying HMRC in writing - either on your tax return or by letter.

 

[Bobbo]

I have just been reading about deferred consideration CG14910 but the HMRC guidance isn't clear on how you apply/claim. Anyone on here have any idea?

Depending on when the sale is, you would have received either 50% or 75% of the total consideration by the time the tax is due.

Given the CGT rate is 20% (and possibly you would be eligible for BADR meaning 10% rate) I would expect the S280 claim to be rejected based on the guidance in the CG14910.

 

[SteveHa]

I have just been reading about deferred consideration CG14910 but the HMRC guidance isn't clear on how you apply/claim. Anyone on here have any idea?

Deferred consideration does not affect the CGT crystalisation date. Only unascertained future consideration may affect the date, but that is NOT deferred consideration. It is usually consideration contingent on and calculated by reference to some future event.