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Company disposals - ensuring your PAYE doesn’t adversely affect the deal

Posted on 10 Dec 2018 - What's trending?

National minimum wage

Experience shows that business owners are often unaware of all they need to do to ensure that their business is ready for a proposed sale.

This can sometimes be to an unknown third party rather than an incumbent management team. How the owners present their business to prospective purchasers can have an impact on the purchaser’s appetite to proceed and in some cases, influence the level of the intended purchase price.

Imagine your own views if a business you were looking to acquire had “shabby financial management information, systems and procedures”. Your view would be totally different to one where everything was in order.

The staff resources in a business is one of the key drivers to its success and with this comes PAYE issues, in particular statutory compliance looking at, payroll, pensions, and benefits-in kind relating to employees but more particularly directors.

At a critical time in any sale these reviews can be extremely time-consuming and indeed distressing, and if working with H M Revenue & Customs (HMRC), may invariably involve some additional tax and national insurance payable. Note HMRC have a specialised task force designated to dealing with PAYE enquiries and end of year compliance issues, whether a business is being sold or not.

Solution

Our Tax team offer a service whereby we visit our clients’ business premises and try to identify problem areas and hopefully put procedures in place and rectify in advance of a sale or indeed a visit from HMRC.

We believe the benefits to clients of our undertaking this work are wide ranging and include the following:

  • The reduced potential of loss of an intended sale
  • The reduced likelihood for a reduction in a purchase price; or
  • any HMRC enquiry revealing additional Tax, NIC, Interest and Penalties to be met 

In terms of the sale or disposal process we believe our work provides additional benefits including:

  • easier due diligence process for any purchaser
  • the potential for less extensive & expensive warranties

Costs vary, depending on the time spent and problems discovered. For further details of our work and fee quotations please get in touch with your usual Streets contact or email emanderfield@streetsweb.co.uk

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