Entrepreneurs who sold their companies to trusts to avoid a hefty CGT bill
following the introduction of the new 18% rate could face a ‘nightmare scenario’
of a huge tax bill but no cash to pay for it, advisers have warned.
Many business owners put their companies into trusts in agreements that
depend on a buyer later coming in for the business,
Financial Times reported.
But there are fears that if a buyer does not materialise, a CGT bill will
still follow but there will be no cash to pay for it.
‘The Inland Revenue might well consider that you have sold a company to your
trust and then effectively bought it back by tearing up the unconditional sale
agreement,’ the FT quoted a Big Four adviser as saying.
Stephen Herring, a partner at BDO Stoy Hayward, says that about 200
businesses were sold to trusts ahead of the CGT changes.
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