Selling your business: your responsibilities

When you sell your business, you have legal responsibilities to staff you employ. You must also finalise your business’ tax affairs.

Self-employed sole trader

Staff

If you have anyone working for you, you must tell them:

  • when and why you’re selling the business
  • about redundancy terms or relocation packages, if necessary

Make sure you don’t breach employees’ rights when a business changes ownership.

Telling HMRC

You can use the online form to tell HM Revenue and Customs (HMRC) that you’ve sold your business. It covers both Self Assessment and National Insurance.

You can also call HMRC’s National Insurance helpline to cancel your Class 2 National Insurance contributions.

VAT registration

If you’re registered for VAT, you may be able to transfer the VAT registration number to the new owner.

Tax returns

You must send a Self Assessment tax return by the deadline. You’ll need to put the date you stopped trading on the return.

Capital Gains Tax

You may have made a capital gain when selling your business (for example the money you get from the sale, or assets from the business that you keep).

If this means you need to pay Capital Gains Tax, you may be able to reduce the amount by claiming Entrepreneurs’ Relief. You may also be able to claim other reliefs.

 

Business partnership

Your responsibilities when selling a partnership depend on whether you’re selling:

  • your share of the partnership
  • the entire partnership
Check your business’ partnership agreement – it may have restrictions and conditions on the sale.

Staff

If you have anyone working for you, you must tell them about the sale, including:

  • when and why you’re selling the partnership
  • details about the redundancy terms or relocation packages you will offer, if required
Make sure you don’t breach employees’ rights when a business changes ownership.

If you’re stopping self-employment

If you’re stopping self-employment when you sell the partnership, call HM Revenue and Customs (HMRC) to cancel your Class 2 National Insurance contributions.

VAT registration

If the partnership is registered for VAT, you may be able to transfer the VAT registration number to the new owner.

Tax returns

If you’re selling your share in the partnership

You must fill out a personal Self Assessment tax return by the deadline.

If you’re selling the whole partnership

You must:

Capital Gains Tax

You may have made a ‘capital gain’ when selling the partnership (for example the money you get from the sale, or assets from the partnership that you keep).If this means you need to pay Capital Gains Tax, you may be able to reduce the amount by claiming Entrepreneurs’ Relief. You may also be able to claim other reliefs.

 

Limited company

Your responsibilities will be different, depending on whether:

  • you’re selling the entire shareholding in your limited company
  • the company is selling part of its business

Selling the entire shareholding

Appoint new directors or company secretaries

You should appoint new directors before you resign as a director yourself.

Tell Companies House to make these changes.

Capital Gains Tax

You may have made a ‘capital gain’ when selling the company (for example the money you get from the sale, or assets from it that you keep).

If this means you need to pay Capital Gains Tax, you may be able to reduce the amount by claiming Entrepreneurs’ Relief. You may also be able to claim other reliefs.

Charges against your company

If you’ve secured finance for the company against your personal property (for example a mortgage on your house to secure a business loan), you must let the provider know within 21 days of the sale.

VAT registration

If the company is registered for VAT, you may want to transfer the VAT registration number to the new owner.

If your company sells part of the business

If any employees are affected by the sale (for example the company’s selling its production business and factory staff will be affected), you must tell them about the changes, including:

  • when and why part of the company is being sold
  • details about the redundancy terms or relocation packages, if necessary

 

 

(GOV.UK)


Story originally appeared on fca.org.uk

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