Get free updates - subscribe to our monthly newsletter Subscribe
It is not uncommon, especially following difficult times faced in the recession, for companies to have diversified into other trades. Whilst this is great for the company for now, helping them to boost profits, should the company later decide to sell one of the trades on it can lead to a significant tax charge in the company as the sale will be of the trade and assets rather than the sale of the shares. This situation may also arise for companies who have always had two separate businesses within a company but as new generations take over it could be that they only wish to continue with one part of it as they lack the experience or interest in other areas.
Careful planning of the structure of the businesses now can result in significant tax savings in the future, but if left too near to the sale, then the opportunity may be lost. The structure needs to be in place for a 12 month period prior to the sale of part of the business, so the sooner the company acts, the better, as it does no harm putting the advice in place now and leaving it in situ.
What You Need To Do Now
We therefore recommend that if anyone has a company with two separate trades within it that they might wish to separate and potentially sell on in the future, they should speak to us about the structure of the company now in order for the planning to be in place should the opportunity for a sale to arise.
Impact on Your Business
The new structure will not change the way that the company operates, in reality there will be only minimal additional administration to deal with, and yet the savings in taxation can be huge. This planning follows the legislation issued by HM Revenue and Customs in relation to business sales and is therefore recognised tax planning practice.
Kerryl Steel, Assistant Tax Consultant
If you like this article and would like our FREE updates sent straight to your inbox then subscribe to our monthly newsletterSubscribe
All content © 2015 Armstrong Watson. All Rights Reserved. Website by Simon Pighills.
Armstrong Watson LLP is a limited liability partnership registered in England and Wales, number OC415608. The registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. Armstrong Watson Accountants, Business & Financial Advisers is a trading style of Armstrong Watson LLP. Armstrong Watson LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities.
Armstrong Watson Audit Limited is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered as a limited company in England and Wales No. 8800970. Registered office: 15 Victoria Place, Carlisle, CA1 1EW
Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 542122. Registered as a limited company in England and Wales No. 7208672. Armstrong Watson Financial Planning & Wealth Management is a trading name of Armstrong Watson Financial Planning Limited. Registered Office: 15 Victoria Place, Carlisle, CA1 1EW