Selling an accountancy firm to a private equity platform

Yes. The relief depends on the company or group being a trading company or trading group. If a subsidiary holds substantial investments, such as let property, the group as a whole may not count as trading. That can put the relief at risk for every shareholder.

Buyers usually want to acquire the trading business only, not family investments. Separating the property first leaves a clean trading group to sell and can help protect Business Asset Disposal Relief. Done properly, the separation itself can be carried out without a tax charge.

To qualify, you must be an officer or employee of the company, or a company in the same group, throughout the two years before the sale. Family members who help informally may not meet this test. Formalising a role has to happen early enough to cover the full two-year period.

They can still sell, but their gains are taxed at the main capital gains tax rates of 18% and 24% rather than the relief rate. Each shareholder's position is assessed separately, so one person missing out doesn't stop others from qualifying.

Loan notes can defer the gain until they are repaid, rather than taxing it all at completion. If you expect to qualify for Business Asset Disposal Relief, an election may be needed to preserve the relief. You also take the risk that the buyer can't repay, so the terms matter as well as the tax.

Rollover equity is where you take part of the sale price as shares in the buyer's group instead of cash. A share-for-share rollover can defer the gain on that part of the price until the new shares are sold. An election can preserve Business Asset Disposal Relief where needed, so the choices should be made before completion.

Each new acquisition by the platform can dilute the share of the group held by earlier sellers. Joining earlier usually means your rolled-over shares make up a bigger slice. Delays in a sale can therefore have a real cost, beyond the tax.

Not always, but it is common where you receive shares or loan notes from the buyer. Clearance under section 138 TCGA 1992 and section 701 ITA 2007 can confirm HMRC accepts the deal is for genuine commercial reasons. HMRC must respond within 30 days of a complete application.

Tax warranties are statements by the sellers about the company's tax position. A tax indemnity is a promise to repay the buyer for certain tax liabilities from before the sale. Buyers' first drafts are often broad, and the final wording is usually negotiated.

No. Cash at completion is taxed straight away. Loan notes and rollover shares can defer the gain until later, while a cash earn-out of unknown amount is usually valued and taxed at completion. Each part needs planning so you know when tax will fall due.