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Thread: Can I sell my business when taxes are still due to SARS?

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    Can I sell my business when taxes are still due to SARS?

    Hi guys, any advice would be greatly appreciated.

    I am looking to sell my business (CC, not VAT Registered). I currently owe SARS outstanding taxes, interest and penaties. Do I need to settle these before I can sell the business? What are my options?

    Thanks.

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    Why would anyone buy the business with outstanding taxes ?

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    It is normally stipulated in the deed of sale that all liabilities existing prior to the business being sold, remains the responsibility of the seller. I just think it is important to disclose the fact that some taxes are outstanding as well.

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    Quote Originally Posted by dellatjie View Post
    It is normally stipulated in the deed of sale that all liabilities existing prior to the business being sold, remains the responsibility of the seller. I just think it is important to disclose the fact that some taxes are outstanding as well.
    All good and well, but if the previous owner leaves the country, and a debt is raised, then who is liable?
    That agreement does nothing for the purchaser, who may be facing a lawsuite.
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    @ OP: Yes you can sell your cc/company with tax liabilities still due. There is no equivalent to the clearance certificate required when selling a property for example. The tax liabilities belong to the company (in the normal course of business).

    However, no sensible purchaser would buy a business with overdue tax liabilities without a really good reason. SARS may still go after you (the member/director) in your personal capacity for tax arrears due from the time when you were the company representative, if these are not paid by the new owner.

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    Hi MMCD
    It depends on what you intend selling, but essentially the answer is yes:
    1. You can sell the Members Interest in the close corporation. In such a case the liability remains that of the close corporation. No amount of clauses in the sale agreement will change that. If it is disclosed to the purchaser then it does not present a problem.
    2. You can sell the business of the close corporation as a going concern and exclude certain or all liabilities. In such a case anyway, the liability will remain that of the close corporation.

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    Yes u can but who in their right mind would buy it if it was a large outstanding debt ? If the company was doing well they would have settled it,

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    Quote Originally Posted by HR Solutions View Post
    If the company was doing well they would have settled it,
    If the company was doing well, it would probably sell at a higher price.

    Businesses in trouble can be quite attractively priced, if a person has the skills and resources to turn that company around.

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    mmcd (17-Nov-16)

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    Hi HR Solutions - the value of the business is more than the taxes due.

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    Thanks for all the feedback guys. Could I just stipulate in the sales agreement that the tax liabilities will be paid for with the proceeds of sale?

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