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NEW SALE RULE SPLITS BUSINESS COMPONENTS

December 1, 2021

A new rule from 1 July 2021 states that when you sell your business, you’re expected to split the price into its component parts. 

For example, you’re selling a shop. It has stock, shelves, some equipment and you want to be paid some goodwill. You’re expected to put figures on all of these. 

As a consequence, the buyers split the price in the same way when they do their accounting.

Before this rule came in, it was common for a seller to split the figures one way and the buyer to split the figures another way – both of them for best tax advantage.

What if you overlooked doing this? 

As seller, you have three months in which to notify the buyer of the split. Since the split could favour the seller and disadvantage the buyer, buyers should beware.

After the three months, it’s the buyers turn.

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