Selling a business - how to portion up the sale advice neede
Discussion
hi - i am selling my shop which has been in business for over 33 years due to my ill health
the buyer now wants me to portion up the sale into stock , fixtures and fittings and good will of the sale for her tax reason
i was just wondering the best way to do it for my own tax reason - at present the sale is £55,000 and i am leaving her £11,000 worth of stock in the shop at retail value ----- after 5 months of negotiations she has hit me hard and wanted a £10,000 reduction at the last minute i just want the sale completed and agreed to a £5,000 reduction - any help on this matter would be great - thanks
the buyer now wants me to portion up the sale into stock , fixtures and fittings and good will of the sale for her tax reason
i was just wondering the best way to do it for my own tax reason - at present the sale is £55,000 and i am leaving her £11,000 worth of stock in the shop at retail value ----- after 5 months of negotiations she has hit me hard and wanted a £10,000 reduction at the last minute i just want the sale completed and agreed to a £5,000 reduction - any help on this matter would be great - thanks
Hi thanks for your reply I have asked my accountant and am waiting on his response but as with anything I was just wondering if anyone had similar dealings on the matter - as for the past 5 months dealing with solictor’s and council legal teams it has been a complete learning curve and stressful time with my illness as well
sfrances said:
h after 5 months of negotiations she has hit me hard and wanted a £10,000 reduction at the last minute i just want the sale completed and agreed to a £5,000 reduction
Classic issue here sadly. With one buyer she has all the power. You're not the first to be hit like this.You should know what the stock figure is - you do take a stock count on a regular basis I assume?
It is important for a buyer (whoever it is) to know the split between the various types of assets that are being purchased.
It is important, for instance, to have a good idea how much of the purchase price is related to plant and machinery and fixtures and fittings as the cost of these will be the basis for future Capital Allowance claims.
The portion related to land and buildings is important for Stamp Duty calculations and Capital Gains Tax calculations in the future.
The portion related to Stock for Resale is important because the business' gross profit and net trading profit (and ultimately its taxable business profits) will be dependent on that figure.
The suggestion that the buyer should work these figures out is a bit disingenuous. The seller should have most of this information readily available and it is only fair that they provide the details to a potential buyer.
Indeed, you should be working these figures out for yourself because your final VAT return, your own Capital Gains Tax calculations and your final Capital Allowance claims will need them too.
It is important for a buyer (whoever it is) to know the split between the various types of assets that are being purchased.
It is important, for instance, to have a good idea how much of the purchase price is related to plant and machinery and fixtures and fittings as the cost of these will be the basis for future Capital Allowance claims.
The portion related to land and buildings is important for Stamp Duty calculations and Capital Gains Tax calculations in the future.
The portion related to Stock for Resale is important because the business' gross profit and net trading profit (and ultimately its taxable business profits) will be dependent on that figure.
The suggestion that the buyer should work these figures out is a bit disingenuous. The seller should have most of this information readily available and it is only fair that they provide the details to a potential buyer.
Indeed, you should be working these figures out for yourself because your final VAT return, your own Capital Gains Tax calculations and your final Capital Allowance claims will need them too.
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