So, you’ve successfully sold your business – what next? There are a few legal responsibilities for traders in the UK, and this guide will explain them.
While most processes are largely the same, some details will be different depending on whether you are a sole trader or have sold a limited company or partnership.
For all businesses
Whether you’re a sole proprietor, a business partner or the director of a limited company, these responsibilities are yours.
Inform your staff
In all cases, you will need to tell any staff you employ when and why you are selling the business. If TUPE regulations – short for Transfer of Undertakings (Protection of Employment) apply, they should be transferred to the new business under the same terms. In other cases, they may be made redundant or relocated. Be sure that you are not breaching any of their rights.
Transfer your VAT registration
If you’re registered for VAT, you should be able to transfer the VAT number over to the new owner.
Pay Capital Gains Tax
You may have made a capital gain from the sale of your business, in which case you will need to pay tax. There are various reliefs that you might be eligible for, including Entrepreneur’s Relief. Any tax owed can either be reported right away or in your self assessment.
For sole traders
You will need to finalise your business’s tax affairs. HMRC have an online form that stops both Self Assessment and National Insurance when you cease trading. You will still need to submit your tax return before the deadline, along with the date you stopped trading.
For limited companies
Your responsibilities will depend on whether you are selling the entire shareholding of the company or part of the business.
If the company is selling part of the business, your duty is to any staff you employ. You will need to tell them when and why the sale is happening, and details on any relocation or redundancy packages.
If you are selling the entire shareholding, you will need to appoint the new directors and any secretaries before resigning as a director yourself.
If you have secured finance for the company against your personal property – for example, a mortgage on your house to secure a business loan – you will need to let the provider know within 21 days of the sale.
For business partnerships
Your legal responsibilities will depend on whether you are selling just your half of the partnership, or the entire partnership.
If you’re selling just your share, you will need to fill out a personal Self Assessment tax form before the deadline. You might finish self-employment, in which case you should call HMRC and cancel your Class 2 National Insurance contributions.
If you’re selling the entire partnership, you must make sure the nominated partner submits a Partnership Tax Return, or SA800, before the deadline. On top of that, you must submit your own Self Assessment.