Accountants are reporting a rush of entrepreneurs seeking to sell their companies before a higher rate of tax takes effect next month, which has overburdened the HM Revenue & Customs (HMRC) with applications for approval of sales before 5 April, when the capital gains tax (CGT) rate will increase from 10% to 18%.
The backlog in the clearance process could leave many businesses with an unexpected tax bill running into millions of pounds, The Times reports.
‘There is a mad rush of people selling up now to avoid paying the extra tax after 5 April. But there are huge delays in the processing of clearance applications at HMRC,’ Mike Warburton, Grant Thornton senior partner, said.
Accountants are warning businesses, which have not received clearance from HMRC before selling, that there is no guarantee how much tax they will have to pay and this would leave them particularly exposed to the anti-avoidance crackdown. Others advise clients to go ahead without it because of the high risk that a clearance application would not be processed by 5 April.
Further reading:
Darling’s CGT changes risk breaking EU law
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