The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A purchasing company can acquire a business in one of two ways, either by purchasing the trade and assets or by purchasing the shares in the company operating the business.
Commercially, purchasers may prefer to buy the trade and assets. This is because they have the ability to negotiate exactly which assets are acquired, and which liabilities are left behind. Conversely, if the shares in the company are acquired the company’s entire history is transferred to the new owner, including its liabilities. The due diligence process, which is carried out prior to completion of the acquisition, aims to identify potential liabilities and obligations, and make recommendations to the purchaser as to how to deal with them or mitigate them (eg by price adjustment, underpinned by structure change).
On the other hand, the preferred option for vendors is often a share sale. Attractive reliefs are often available, depen
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