There exists a glaring omission in the new Capital Gains Tax rules - they did not address earn-outs. Thousands of entrepreneurs who sold their businesses in 2005/06 have until 31st January to sort out a CGT tax nightmare for which HMRC issued no guidelines whatsoever.
This affected those people who are receiving part of their payment for their business in shares or loan notes as an earn-out (deferred payment). They had to tell HMRC before the end of January whether they were paying the CGT immediately or deferring it until they are able to cash the shares/loan notes in. The consequences of making a wrong decision can be enormous.
Thanks to PKF (UK), who provided the following illustration of this problem:
The wholesale business has an established trading history and has built up a strong reputation and a loyal customer base. Business is drawn from a wide demographic of clients with a good spread across different business sectors.
This is a unique opportunity to acquire a company specialising in luxury performance cycle clothing, utilising the finest specialist fabrics and cutting-edge construction techniques.
A leading internet-based provider of customisable and curated beauty box services. Over the last decade, the business has evolved from a premier subscription service to a leading internet-based provider of highly attractive and rapidly expanding beau...
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