Key tax considerations in an asset sale

Produced in partnership with Mark Simpson of Squire Patton Boggs (UK) LLP

The following Tax practice note produced in partnership with Mark Simpson of Squire Patton Boggs (UK) LLP provides comprehensive and up to date legal information covering:

Key tax considerations in an asset sale
Assets included in the sale
Apportionment of the consideration between the assets
Just and reasonable apportionment
Contingent or deferred consideration
Seller ceasing to trade
Assets held by the seller on trading account
Assets held by the seller on capital account
CGT implications of sale for the seller
Rollover relief

More...

Business asset disposal relief and annual exempt amount not available to corporates
CGT implications of sale for the buyer
Intangible assets
Implications of sale of intangibles falling within the IFA regime
Implications of sale of intangibles falling outside the IFA regime
Intangibles subject to the patent box rules
Plant or machinery capital allowances
Structures and buildings allowance
Capital assets and R&D capital allowances
VAT
Transfer of a going concern
Catering for the possibility that the transfer is found not to constitute a TOGC
Land transaction taxes

The sale of a company's business can be structured as either:

•
a sale of the business assets owned by the current owner, including goodwill (an asset sale), or
•
a sale of shares if the business is being carried on by a company (a share sale)

The choice between an asset sale or a share sale is determined by tax and non-tax considerations. See Practice Note: Share sale or asset sale—tax considerations for an outline of the differing tax advantages and disadvantages applicable to each option.

This Practice Note summarises the key tax considerations relevant to the sale of assets by a corporate seller to a corporate buyer, both of which are chargeable to UK corporation tax.

In the case of a transfer of a business, special contractual provisions are included in the asset purchase agreement to ensure, so far as possible, that it is a transfer of a business rather than just a transfer of assets, for which see Precedent: Asset purchase agreement—long form and the related drafting notes.

Outside the scope of this Practice Note are considerations relating to:

•
a cross-border asset sale
•
an asset sale where either party is not a company
•
an intra-group sale of assets
•
a sale between connected parties, and
•
the employment tax considerations relevant to employees who are transferred pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246,

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