The shareholder exit frame work can be applied when one or more owners of a business wish to leave the business either to retire or possibly as a result of a shareholder dispute.
Traditional Considerations
Ordinarily when the ownership of a business changes there a number of tax considerations both present and future. These can be
- Capital gains tax
- Corporation Tax
- V.A.T
- Stamp Duty and Stamp Duty Land Tax
- Income tax
- Inheritance tax
Consideration needs to be given to a number of issues here:
- Is the business being sold in direct ownership of the shareholders? If not then it may be appropriate to consider a pre-sale reconstruction to reduce the incidence of taxation and give the shareholders the opportunity to share directly in the proceeds of the sale.
- Are there any previous transactions that may trigger a tax liability on sale e.g. a previous transfer of assets between two group companies
- Do the vending shareholders qualify for CGT treatment? If not can this be rectified.
- Do the vending shareholders qualify for Business Asset Disposal Relief or Investor relief? If not how can this be remedied?
- Will HMRC give tax clearances for the proposed transactions?
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