Selling their business is often the last big transaction a person undertakes, and is one which may have a very significant effect on their lifestyle in retirement.

As well as often being contractually complex, business sales also present a whole raft of potential tax issues, which can affect liabilities for Income Tax, Capital Gains Tax, Stamp Duty Land Tax and Corporation Tax.

One of the most important aspects for tax purposes in the negotiations is the apportionment of any purchase proceeds between the values of the different assets transferred to the new owner. This can also be an area of argument with HM Revenue and Customs (HMRC).

HMRC have recently issued a new Practice Note (23 pages including appendices) offering guidance on how to arrive at a ‘just and reasonable’ apportionment, as is required under the various tax laws that apply. The guidance is available via the HMRC website.