Tax on the transfer of a business

roast222

I have a friend who has been passed on his mothers pharmacy business recently. He had the business independently valued at the date of transfer and is paying back his mother over a period of 5 years. What are the tax implications (if any) for:

(a) The friend?
(b) His mother?

The pharmacists is a long standing family owned business which has been carried on for over 30 years.

Lockedout2

Lots but they were considered before the transfer. :-)

Capital Gains Tax, Capital Gains Tax, Value Added Tax, Stamp Duty.

roast222

Lockedout2 wrote: »

Lots but they were considered before the transfer. :-)

Capital Gains Tax, Capital Gains Tax, Value Added Tax, Stamp Duty.

Can she not claim retirement relief on the CGT given that she is over 65? Also there was no transfer of property so I presume no stamp duty would have applied?

CIARAN_BOYLE

roast222 wrote: »

Can she not claim retirement relief on the CGT given that she is over 65? Also there was no transfer of property so I presume no stamp duty would have applied?

It depends. Does she fit the criteria for retirement relief? Does he fit the business relief for CAT. What form is the business in? Is it a company? If so the transfer of shares is liable for stamp duty. Does the business own the property? If not is he paying rent. If the mother owns the building it can cause trouble when transferring the business.

dogsears

Likelihood is that everything will be ok because there are various tax reliefs available for transfers of business from one generation to another (with the possible exception of Stamp Duty as referred to by others). But the rules are complex and its easy to inadvertantly miss out - in which case the consequences can be significant depending on value. If they haven't done so already your friend and his mother absolutely need to consult their adviser. In fact I'd be amazed if they didn't do so beforehand.

roast222

CIARAN_BOYLE wrote: »

It depends. Does she fit the criteria for retirement relief? Does he fit the business relief for CAT. What form is the business in? Is it a company? If so the transfer of shares is liable for stamp duty. Does the business own the property? If not is he paying rent. If the mother owns the building it can cause trouble when transferring the business.

She is over 65, had the bsuiness for over 5 years having taken it over when her husband died in 2010. The business is a sole trader so I presume no stamp duty payable then? The business itself was transferred but the premises is still retained by the mother and he is now paying her a rent for the use of the premises.

Lockedout2

, had the bsuiness for over 5

But it's 10 years for RR!!!! What's your interest in it, surely your best bet is to ask him to see the advice?

Mr. Incognito

Read the charter

Consult a professional.

This is the internet.