CASE STUDY: SALE OF A BUSINESS
Introduction
Our team was instructed by one of our long-standing clients to support with the sale of one of their businesses, a nursery in the South-West of England.
The client was an entrepreneur, who owned the business through a holding company that also controlled their other businesses (the ‘Group’).
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Taking The Load Off The Client
Our team worked quickly and effectively to make sure the sale went ahead successfully, while reducing the burden on the client and making the transaction as stress-free as possible.
We prepared both the standard year-end accounts and accounts up to the sale date, and also identified and resolved any inter-company balances so that the company could be sold with a clean financial slate. We worked closely with the client’s lawyers, drawing up any financial documentation that they needed to ensure the sale went ahead smoothly.
Indentifying Relief
During the course of the sale, our lead accountant James Powell identified an area where the client could minimise their personal tax bill from the sale. By claiming Business Asset Disposal Relief (known as ‘Entrepreneur’s Relief’), the client could reduce their tax burden considerably on the gain arising from the company sale. However, since the nursery was owned by the holding company, any gain on selling it would in fact belong to the holding company. As entrepreneur’s relief is only available to individuals, since it comes under the capital gains tax regime, this benefit would not have been available.
Structuring The Sale
James reviewed the company’s position and consulted the relevant tax legislation surrounding entrepreneur’s relief, and confirmed that the law would still allow the client to claim the relief if the holding company itself was made part of the agreement, with the purchaser acquiring the holding company along with its 100% shareholding of the nursery. This suggestion was pitched and agreed by all parties, and we also undertook to remove any businesses in the Group which were not part of the sale and place them under the client’s direct control. The result was that the client would be able to claim the reliefs to which they were entitled, reducing their capital gains tax rate from 20% to 10%, and the purchasers received everything they were looking to buy without any unwanted additional extras.
A Positive Outcome
The sale ultimately went ahead successfully, and the client was very happy with our service. At Comera Professional, we always go the extra mile for our clients and get to understand their specific circumstances and needs. As above, this often allows us to go ‘beyond the brief’ and deliver real value for them.
How we can help you
We've worked extensively with clients to help them structure their business interests in a tax-efficient, manageable way. We can also help with financial consultancy or a wide variety of business consultancy services if you need them. If you'd like to talk about your own circumstances and how we can help, you can get in touch with our Practice Accountant, James Powell, using the details below:
Practice Accountant
