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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am selling 100 % shares in a Ltd company. There is a

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I am selling 100 % shares in a Ltd company. There is a inherent capital gains liability if the land owned by the company is sold, the purchaser is aware and agrees through the SPA that the company has to pay that, if the land was sold and not me. He has purchased the shares through a SPV , Ltd company with no assetts. Is there any scenario where that capital gain tax liability could be put on me .we have owned the company for 39 years
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Companies are not subject to the Capital Gains Tax (CGT) regime so there is no inherent tax involved here. However, any capital gains or losses made by companies are passed through their trading accounts, and are reflected in their overall profits or losses and are subject to Corporation Tax (CT). You have no liability whatsoever in this matter as you and the company are entirely separate legal persons. You will, of course, have a personal CGT liability on any gain made on the sale of your shares in the company, but that is as far as it goes. This gain will be taxed after deducting your Annual Exempt Amount (AEA), currently 11.1K, not cumulative, CGT is levied at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. However, in this case, you will almost certainly be entitled to Entrepreneurs' Relief which is a special CGT flat rate of 10%. I do hope that I have been able to set your mind at rest on this matter.
Customer: replied 1 year ago.
So the purchaser at year end accounts will be liable for tax or the company will ,of which he owns shares. Who is liable for the tax if it is not paid ,does it come down to the present directors who were at the company at year end and signed off accounts or can previous directors be liable for the tax even if they did not authorise the sale of the land, which would create the corp tax liability. I am dealing with a very experienced property dealer and I am just looking to cover all the angles.
Expert:  bigduckontax replied 1 year ago.
The company will be liable. The directors can, in general terms, only be liable where a fraudulent preference has taken place. For example, if they pay bills of one organisation in preference to another and the other is not paid. The most common fraudulent preference is paying wages of directors instead of settling creditors first and there being no funds left for the latter. In the scenario you mention you have not decided as a director to sell off the land so liability for unpaid tax thereon would fall on the new directors who did so authorise, assuming that a fraudulent preference has taken place. You would escape liability; you are not involved as you have no responsibility for the ;landed property disposal.
Customer: replied 1 year ago.
Thank you that is reassuring.
Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance. Please be so kind as to rate me before you leave the Just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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