Commentary

D6.438 Management buy-out—purchaser tax position

Corporate tax
Corporate tax | Commentary

D6.438 Management buy-out—purchaser tax position

Corporate tax | Commentary

D6.438 Management buy-out—purchaser tax position

Purchaser tax position on a share deal

The implications for a purchaser following a 'share' deal are as follows:

  1.  

    (a)     the purchase price of the Target share capital will be Newco's base cost for a future capital gains disposal1. However, if the substantial shareholding exemption applies2, any gain will, in any case, be exempt from tax

  2.  

    (b)     the purchasers will take on the historic tax attributes of Target. It should, however, be borne in mind that:

    1.  

      (1)     losses brought forward may be restricted in certain circumstances (D1.1125)3

    2.  

      (2)     relief may not be available at all for losses carried forward (D1.1106, D1.1108)4, as HMRC could argue that there is a different trade to the one that generated the losses, and

    3.  

      (3)     capital losses brought forward may also be restricted on the change of ownership (Division D2.4)5

A 'share' deal could bring

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