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Anyone purchased a business by taking over the existing cc with a 100% membership buy out ?
Any Tax or VAT implications that you are aware of ?
Thanks in advance!
Not 100% sure Tax wise ... if I'm not mistaken, the tax of the company must be determined for that company and paid as normal. The profits stay the profits of the company. Any dividends declared must be charged STC (can't remember if CC's pay out dividends or what they pay out, I run one but don't pay dividends, and for my BCom we deal with companies, not CC's ... haven't done CC's since 1st year :P )
In terms of VAT, the buyout of a company is zero rated if I remember correctly.
Last edited by Dave A; 03-Apr-09, 08:43 AM.
Reason: tag cleanup
If you need any Accounting, Tax or even Financial Management advice, PM me and I'll try help and keep your information confidential.
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Essentially the juristic person that is the trading business remains unchanged, so you would inherit the position of the CC in its entirety. Be warned though, this could also include hidden horrors. And all lines of credit would probably need to be resecured as most agreements put high store on who the members are. Changes in membership can make creditors nervous and will certainly be carefully looked at by banks.
If you go this route, do stringent due diligence testing.
I agree with Dave. Is buying the assets into a new CC not a viable option? That way you know you have a clean slate.
You stand to inherit so much when buying a cc, contracts signed, there terms and conditions, debt etc... the stuff not so easily found. Basically a very thorough audit would be needed to track down any lose ends (they may have even forgotten themselves)
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