Joe Brough details the capital gains tax implications when an individual receives deferred consideration on the sale of their business and how tax relief is claimed when it becomes irrecoverable.
When an individual sells shares in their owner-managed company, any gain is subject to capital gains tax (CGT). When calculating the total amount of consideration receivable, this includes any value received in money and money’s worth, which may not always be cash.
If a sale is made at an undervalue or not on arm’s length terms, the open market value will be substituted in place of the actual sales proceeds (under TCGA 1992, ss 17 and 18).
Some sales will involve non-cash consideration or proceeds which may be taxed as income. These can include contracts for the sale of land, sums due under an employment contract and share-for-share exchanges; however, these types of contracts are outside the scope of
