When a company sells a business as a going concern it is in effect selling a collection of
assets inc. GW attached to the business
S will receive consideration and will be liable to pay corporation tax on it
o Way corporation tax liability calculated depends on nature of assets transferred to B
APPROACH TO TAX QUESTIONS
Share or asset sale?
Who is seller?
Is seller individual or company?
What type of tax will seller pay?
o Corporation Tax
a) Stock, goodwill and IP treated as income
b) Otherwise, capital gains
Reliefs / exemptions?
Conclude
Buyer tax issues
,TAX IMPLICATIONS FOR SELLER
CORPORATION TAX (CT)
Profit or loss arising on the sale of
o Trading stock
o GW
o IP
Acquired or created after 1 April 2002 = INCOME = revenue generated on a regular basis
Gains or losses arising on the sale of capital assest such as:
o Land
o Plant and machinery
o Other GW
o IP
= CAPITAL (as either chargeable gains or capital losses) = one-off transactions
Pay CT on Taxable Total Profits (TTP) (income and capital) at 19%
o Financial year: 1 April – 31 March
Deadlines for payment of tax:
o Where TTP ≤ £1.5m, by date 9 calendar months and one day after end of relevant
accounting period (i.e. by 1st January)
o Where TTP > £1.5m, quarterly instalments over relevant accounting period and next
Straddling: where accounting year does not coincide with financial year, TTP of accounting
period apportioned between financial years + relevant proportions of TTP taxed at
applicable rates for each tax year
, CORPORATION TAX PROFORMA
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