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Selling a sole trading business

  • 13-04-2010 10:51pm
    #1
    Smcgie
    Registered Users, Registered Users 2 Posts: 1,379 ✭✭✭


    Hi folks, i have currently have an offer for my business and in need of assistance on a few issues.
    • If i sell the business and assets what tax or vat am i liable to pay.
    • Due to the business and myself being VAT registered, is the vat claimed thought purchases (eg. Commercial vehicle) have to be repaid to the revenue?
    • Must i contact the CRO?
    • Must i contact the Revenue?
    Any help on selling off a sole trading business would be of great assistance.

    Best Regards,
    S


Comments

  • #2
    searay
    Registered Users, Registered Users 2 Posts: 436 ✭✭searay


    Dear S,

    Well done on finding a buyer. I hope he has the funds to get the deal done.

    The main tax issues are:

    In relation to selling your assets, say equipment, if you are vat registered you must charge vat on the price. If he is vat registered he can reclaim the vat so it shouldn't affect the price. You are liable to tax on the difference between the sale value of the equipment and its tax written down value. An offset can be claimed where there is a loss.

    For debtors its usually more tax efficient to collect what's due to you and not sell them. Normally the vendor pays off creditors as well.

    The main tax issue will be on goodwill which is the difference between what he pays you and the value of your assets. Normally capital gains tax is payable but there is retirement relief available if you are over 55.

    You don't have to repay vat you've claimed over the years.

    People are lucky to get to sell a business once in their lifetime and I have seen many deals fail because either the buyer or seller gets some of the basics wrong. If the deal is significant for you, I would recommend you speak to an accountant with experience in this area.

    PM me if you want suggestions.


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