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It is important that your tax and any official records concerning your business are up-to-date when you sell your business.

Business records when selling your business

One of the major reasons for this is that the buyer's solicitors and accountants will have to carry out due diligence checks. This involves gathering information about all aspects of your business so that the buyer can make an informed decision and modify the terms of the sale if necessary. Among other things, they will want to see:

• profit-and-loss statements
• tax returns
• any relevant leases and details of any outstanding loans, with repayment schedules

See undergoing due diligence.

Customers and suppliers

You should also inform all your customers and suppliers so that:

• they have the chance to raise any outstanding payments, credits and liabilities
• you can account for any outstanding payments, credits and liabilities when you finalise your accounts and tax affairs

There are a number of steps to take and points to consider if you want to stop being self-employed.

Notifying HM Revenue & Customs (HMRC)

You must tell HMRC if you've stopped trading as a sole trader or you're ending or leaving a business partnership. Tell HMRC you're . HMRC will then cancel your Class 2 National Insurance contributions.

Finalising your Income Tax

You'll still need to before the deadline for the tax year in which your self-employment ended.

.

See HMRC's video on how to .

Capital Gains Tax if you sell or dispose of assets

If you sell or dispose of business assets - for example buildings, equipment, fixtures and fittings, or even the business' reputation ('goodwill') - you may also need to pay Capital Gains Tax on the 'profit' (or gain) that you make.

You may be able to claim reliefs - particularly  - that may reduce or postpone any gains. If you sell your own assets, you may have Capital Gains Tax to pay too.

There are other to reduce the amount of Capital Gains Tax that you may be able to claim.

Offsetting costs against your tax bill

There will be costs involved in the process of closing down your business including:

• the cost of administration, postage and telephone charges to notify the relevant authorities - eg HMRC, institutions, suppliers and customers
• the cost of professional services from solicitors, accountants, estate agents, etc

Many of these costs may be allowable expenses, which can be offset against your tax bill. See .

Offsetting losses against your tax bill

If you were self-employed and you've made a loss, you may be able to offset this loss against your tax bill for the previous three years.

Read more on .

You must call the as soon as possible if you're registered and stop trading as a contractor or subcontractor.

If you are selling or closing a limited company there are a number of things you need to consider. 

Corporation Tax

If the company or organisation is liable for Corporation Tax, it will still have to file Company Tax Returns and pay Corporation Tax during the closing or winding-up process when the company stops trading.

See .

Closing a limited company

If you are you usually need to have the agreement of your company's directors and shareholders. The way you close the company depends on whether it can pay its bill - known as solvent- or can't pay its bills - known as insolvent.

If you are selling a limited company you should appoint new directors before you resign as a director yourself. You will need to inform Companies House about these changes using .

If you are closing a limited company the way you inform Companies House may be different. See closing a company or partnership.

If you are selling your business, any employees will transfer to the new employer. Therefore, you have a legal duty to inform and consult your employees under the business transfer legislation. Understand your responsibilities to employees transferred out of your business.

Informing and consulting with employees

If you already have an information and consultation (I&C) agreement with your employees, you might choose to use this forum for informing and consulting employees about business transfers.

If you have employees, you'll have certain legal responsibilities to meet when closing your business.

How to handle reduncancies

If you close your business, you will have to make your employees redundant.

Depending on how many employees you have and how long you have employed them for, you will have to:

• make statutory redundancy payments
• inform employees individually - and, if relevant, speak to their representatives
• follow a fair redundancy procedure

See redundancy: the options.

Payroll issues when closing a business

You need to tell HM Revenue & Customs (HMRC) as soon as possible if your business stops employing people you have stopped trading.

Find out how to .

Changes to pension schemes when closing a business

You must inform and consult employees about significant changes to their pension arrangements if you:

• employ 50 or more staff
• offer an occupational pension scheme or contribute to employees' personal pension schemes

Such changes include terminating the occupational scheme or ending your contributions to personal schemes - either of which could happen if you are closing your business.

See know your legal obligations on pensions.

Employee rights when closing down a business

If you close your business, you are required to treat your employees fairly and follow the correct process.

.

If you are VAT-registered and you are closing your business, you will need to inform HM Revenue & Customs (HMRC) that you want to .

Once HMRC are satisfied that your registration should be cancelled, they will confirm the date of de-registration which is usually the date you stopped trading.

You will have to submit a final VAT return for the period up to and including the de-registration date. You must account for VAT on stock and certain assets you have at the close of business on the day your registration is cancelled.

See submitting VAT returns, paying and repayments.

VAT when selling your business

If you are selling your VAT-registered business, you normally have to cancel your VAT registration.

However, in some situations, the new owner of your business can apply to keep your VAT registration number through a .

Whatever the reasons for closing your business, to make the process as easy as possible, you should put together a formal written plan.

To do this, it may be useful to refer back to your original business plan to help make sure you cover necessary areas. You may even have specified procedures in your formation documents to follow when winding up the business. See write a business plan: step-by-step.

Closing a business plan - what to include

Your plan should ideally list everything you need to do under headings, such as:

• tax requirements
• rentals and leases
• closing accounts with suppliers and customers.

Set a specific date or timescale for each task.

Seek professional advice

If your business is small, you will almost certainly need to call on outside specialist professional advisers such as your solicitor, accountant, and financial adviser. If there are assets to dispose of, you may need to use an estate agent, valuer, surveyor or auctioneer.

See choose a solicitor for your business and how to choose an accountant for your business.

Pay the right amount of tax

To make sure you pay the right amount of tax, you will need to collect any money you are owed, and pay all your outstanding bills. This includes your regular operating costs up until the point your business closes, including utility and telephone bills and any payroll obligations.

If you find that disputes arise with creditors or debtors, outside parties can bring an objective viewpoint and help you to reach an amicable settlement. Read how to ensure customers pay you on time.

HM Revenue & Customs (HMRC) expects all customers to make payments when they are due. However they understand that as a result of circumstances outside your control, this isn't always possible. Let HMRC know about tax payment problems.

Letting HMRC know that you have stopped trading or are selling your business will help avoid them issuing unnecessary payment demands to you. .

It is important that your tax and any official records concerning your business are up-to-date when you sell your business.

Business records when selling your business

One of the major reasons for this is that the buyer's solicitors and accountants will have to carry out due diligence checks. This involves gathering information about all aspects of your business so that the buyer can make an informed decision and modify the terms of the sale if necessary. Among other things, they will want to see:

• profit-and-loss statements
• tax returns
• any relevant leases and details of any outstanding loans, with repayment schedules

See undergoing due diligence.

Customers and suppliers

You should also inform all your customers and suppliers so that:

• they have the chance to raise any outstanding payments, credits and liabilities
• you can account for any outstanding payments, credits and liabilities when you finalise your accounts and tax affairs

There are a number of steps to take and points to consider if you want to stop being self-employed.

Notifying HM Revenue & Customs (HMRC)

You must tell HMRC if you've stopped trading as a sole trader or you're ending or leaving a business partnership. Tell HMRC you're . HMRC will then cancel your Class 2 National Insurance contributions.

Finalising your Income Tax

You'll still need to before the deadline for the tax year in which your self-employment ended.

.

See HMRC's video on how to .

Capital Gains Tax if you sell or dispose of assets

If you sell or dispose of business assets - for example buildings, equipment, fixtures and fittings, or even the business' reputation ('goodwill') - you may also need to pay Capital Gains Tax on the 'profit' (or gain) that you make.

You may be able to claim reliefs - particularly  - that may reduce or postpone any gains. If you sell your own assets, you may have Capital Gains Tax to pay too.

There are other to reduce the amount of Capital Gains Tax that you may be able to claim.

Offsetting costs against your tax bill

There will be costs involved in the process of closing down your business including:

• the cost of administration, postage and telephone charges to notify the relevant authorities - eg HMRC, institutions, suppliers and customers
• the cost of professional services from solicitors, accountants, estate agents, etc

Many of these costs may be allowable expenses, which can be offset against your tax bill. See .

Offsetting losses against your tax bill

If you were self-employed and you've made a loss, you may be able to offset this loss against your tax bill for the previous three years.

Read more on .

You must call the as soon as possible if you're registered and stop trading as a contractor or subcontractor.

If you are selling or closing a limited company there are a number of things you need to consider. 

Corporation Tax

If the company or organisation is liable for Corporation Tax, it will still have to file Company Tax Returns and pay Corporation Tax during the closing or winding-up process when the company stops trading.

See .

Closing a limited company

If you are you usually need to have the agreement of your company's directors and shareholders. The way you close the company depends on whether it can pay its bill - known as solvent- or can't pay its bills - known as insolvent.

If you are selling a limited company you should appoint new directors before you resign as a director yourself. You will need to inform Companies House about these changes using .

If you are closing a limited company the way you inform Companies House may be different. See closing a company or partnership.

If you are selling your business, any employees will transfer to the new employer. Therefore, you have a legal duty to inform and consult your employees under the business transfer legislation. Understand your responsibilities to employees transferred out of your business.

Informing and consulting with employees

If you already have an information and consultation (I&C) agreement with your employees, you might choose to use this forum for informing and consulting employees about business transfers.

If you have employees, you'll have certain legal responsibilities to meet when closing your business.

How to handle reduncancies

If you close your business, you will have to make your employees redundant.

Depending on how many employees you have and how long you have employed them for, you will have to:

• make statutory redundancy payments
• inform employees individually - and, if relevant, speak to their representatives
• follow a fair redundancy procedure

See redundancy: the options.

Payroll issues when closing a business

You need to tell HM Revenue & Customs (HMRC) as soon as possible if your business stops employing people you have stopped trading.

Find out how to .

Changes to pension schemes when closing a business

You must inform and consult employees about significant changes to their pension arrangements if you:

• employ 50 or more staff
• offer an occupational pension scheme or contribute to employees' personal pension schemes

Such changes include terminating the occupational scheme or ending your contributions to personal schemes - either of which could happen if you are closing your business.

See know your legal obligations on pensions.

Employee rights when closing down a business

If you close your business, you are required to treat your employees fairly and follow the correct process.

.

If you are VAT-registered and you are closing your business, you will need to inform HM Revenue & Customs (HMRC) that you want to .

Once HMRC are satisfied that your registration should be cancelled, they will confirm the date of de-registration which is usually the date you stopped trading.

You will have to submit a final VAT return for the period up to and including the de-registration date. You must account for VAT on stock and certain assets you have at the close of business on the day your registration is cancelled.

See submitting VAT returns, paying and repayments.

VAT when selling your business

If you are selling your VAT-registered business, you normally have to cancel your VAT registration.

However, in some situations, the new owner of your business can apply to keep your VAT registration number through a .

Whatever the reasons for closing your business, to make the process as easy as possible, you should put together a formal written plan.

To do this, it may be useful to refer back to your original business plan to help make sure you cover necessary areas. You may even have specified procedures in your formation documents to follow when winding up the business. See write a business plan: step-by-step.

Closing a business plan - what to include

Your plan should ideally list everything you need to do under headings, such as:

• tax requirements
• rentals and leases
• closing accounts with suppliers and customers.

Set a specific date or timescale for each task.

Seek professional advice

If your business is small, you will almost certainly need to call on outside specialist professional advisers such as your solicitor, accountant, and financial adviser. If there are assets to dispose of, you may need to use an estate agent, valuer, surveyor or auctioneer.

See choose a solicitor for your business and how to choose an accountant for your business.

Pay the right amount of tax

To make sure you pay the right amount of tax, you will need to collect any money you are owed, and pay all your outstanding bills. This includes your regular operating costs up until the point your business closes, including utility and telephone bills and any payroll obligations.

If you find that disputes arise with creditors or debtors, outside parties can bring an objective viewpoint and help you to reach an amicable settlement. Read how to ensure customers pay you on time.

HM Revenue & Customs (HMRC) expects all customers to make payments when they are due. However they understand that as a result of circumstances outside your control, this isn't always possible. Let HMRC know about tax payment problems.

Letting HMRC know that you have stopped trading or are selling your business will help avoid them issuing unnecessary payment demands to you. .

It is important that your tax and any official records concerning your business are up-to-date when you sell your business.

Business records when selling your business

One of the major reasons for this is that the buyer's solicitors and accountants will have to carry out due diligence checks. This involves gathering information about all aspects of your business so that the buyer can make an informed decision and modify the terms of the sale if necessary. Among other things, they will want to see:

• profit-and-loss statements
• tax returns
• any relevant leases and details of any outstanding loans, with repayment schedules

See undergoing due diligence.

Customers and suppliers

You should also inform all your customers and suppliers so that:

• they have the chance to raise any outstanding payments, credits and liabilities
• you can account for any outstanding payments, credits and liabilities when you finalise your accounts and tax affairs

There are a number of steps to take and points to consider if you want to stop being self-employed.

Notifying HM Revenue & Customs (HMRC)

You must tell HMRC if you've stopped trading as a sole trader or you're ending or leaving a business partnership. Tell HMRC you're . HMRC will then cancel your Class 2 National Insurance contributions.

Finalising your Income Tax

You'll still need to before the deadline for the tax year in which your self-employment ended.

.

See HMRC's video on how to .

Capital Gains Tax if you sell or dispose of assets

If you sell or dispose of business assets - for example buildings, equipment, fixtures and fittings, or even the business' reputation ('goodwill') - you may also need to pay Capital Gains Tax on the 'profit' (or gain) that you make.

You may be able to claim reliefs - particularly  - that may reduce or postpone any gains. If you sell your own assets, you may have Capital Gains Tax to pay too.

There are other to reduce the amount of Capital Gains Tax that you may be able to claim.

Offsetting costs against your tax bill

There will be costs involved in the process of closing down your business including:

• the cost of administration, postage and telephone charges to notify the relevant authorities - eg HMRC, institutions, suppliers and customers
• the cost of professional services from solicitors, accountants, estate agents, etc

Many of these costs may be allowable expenses, which can be offset against your tax bill. See .

Offsetting losses against your tax bill

If you were self-employed and you've made a loss, you may be able to offset this loss against your tax bill for the previous three years.

Read more on .

You must call the as soon as possible if you're registered and stop trading as a contractor or subcontractor.

If you are selling or closing a limited company there are a number of things you need to consider. 

Corporation Tax

If the company or organisation is liable for Corporation Tax, it will still have to file Company Tax Returns and pay Corporation Tax during the closing or winding-up process when the company stops trading.

See .

Closing a limited company

If you are you usually need to have the agreement of your company's directors and shareholders. The way you close the company depends on whether it can pay its bill - known as solvent- or can't pay its bills - known as insolvent.

If you are selling a limited company you should appoint new directors before you resign as a director yourself. You will need to inform Companies House about these changes using .

If you are closing a limited company the way you inform Companies House may be different. See closing a company or partnership.

If you are selling your business, any employees will transfer to the new employer. Therefore, you have a legal duty to inform and consult your employees under the business transfer legislation. Understand your responsibilities to employees transferred out of your business.

Informing and consulting with employees

If you already have an information and consultation (I&C) agreement with your employees, you might choose to use this forum for informing and consulting employees about business transfers.

If you have employees, you'll have certain legal responsibilities to meet when closing your business.

How to handle reduncancies

If you close your business, you will have to make your employees redundant.

Depending on how many employees you have and how long you have employed them for, you will have to:

• make statutory redundancy payments
• inform employees individually - and, if relevant, speak to their representatives
• follow a fair redundancy procedure

See redundancy: the options.

Payroll issues when closing a business

You need to tell HM Revenue & Customs (HMRC) as soon as possible if your business stops employing people you have stopped trading.

Find out how to .

Changes to pension schemes when closing a business

You must inform and consult employees about significant changes to their pension arrangements if you:

• employ 50 or more staff
• offer an occupational pension scheme or contribute to employees' personal pension schemes

Such changes include terminating the occupational scheme or ending your contributions to personal schemes - either of which could happen if you are closing your business.

See know your legal obligations on pensions.

Employee rights when closing down a business

If you close your business, you are required to treat your employees fairly and follow the correct process.

.

If you are VAT-registered and you are closing your business, you will need to inform HM Revenue & Customs (HMRC) that you want to .

Once HMRC are satisfied that your registration should be cancelled, they will confirm the date of de-registration which is usually the date you stopped trading.

You will have to submit a final VAT return for the period up to and including the de-registration date. You must account for VAT on stock and certain assets you have at the close of business on the day your registration is cancelled.

See submitting VAT returns, paying and repayments.

VAT when selling your business

If you are selling your VAT-registered business, you normally have to cancel your VAT registration.

However, in some situations, the new owner of your business can apply to keep your VAT registration number through a .

Whatever the reasons for closing your business, to make the process as easy as possible, you should put together a formal written plan.

To do this, it may be useful to refer back to your original business plan to help make sure you cover necessary areas. You may even have specified procedures in your formation documents to follow when winding up the business. See write a business plan: step-by-step.

Closing a business plan - what to include

Your plan should ideally list everything you need to do under headings, such as:

• tax requirements
• rentals and leases
• closing accounts with suppliers and customers.

Set a specific date or timescale for each task.

Seek professional advice

If your business is small, you will almost certainly need to call on outside specialist professional advisers such as your solicitor, accountant, and financial adviser. If there are assets to dispose of, you may need to use an estate agent, valuer, surveyor or auctioneer.

See choose a solicitor for your business and how to choose an accountant for your business.

Pay the right amount of tax

To make sure you pay the right amount of tax, you will need to collect any money you are owed, and pay all your outstanding bills. This includes your regular operating costs up until the point your business closes, including utility and telephone bills and any payroll obligations.

If you find that disputes arise with creditors or debtors, outside parties can bring an objective viewpoint and help you to reach an amicable settlement. Read how to ensure customers pay you on time.

HM Revenue & Customs (HMRC) expects all customers to make payments when they are due. However they understand that as a result of circumstances outside your control, this isn't always possible. Let HMRC know about tax payment problems.

Letting HMRC know that you have stopped trading or are selling your business will help avoid them issuing unnecessary payment demands to you. .

It is important that your tax and any official records concerning your business are up-to-date when you sell your business.

Business records when selling your business

One of the major reasons for this is that the buyer's solicitors and accountants will have to carry out due diligence checks. This involves gathering information about all aspects of your business so that the buyer can make an informed decision and modify the terms of the sale if necessary. Among other things, they will want to see:

• profit-and-loss statements
• tax returns
• any relevant leases and details of any outstanding loans, with repayment schedules

See undergoing due diligence.

Customers and suppliers

You should also inform all your customers and suppliers so that:

• they have the chance to raise any outstanding payments, credits and liabilities
• you can account for any outstanding payments, credits and liabilities when you finalise your accounts and tax affairs

There are a number of steps to take and points to consider if you want to stop being self-employed.

Notifying HM Revenue & Customs (HMRC)

You must tell HMRC if you've stopped trading as a sole trader or you're ending or leaving a business partnership. Tell HMRC you're . HMRC will then cancel your Class 2 National Insurance contributions.

Finalising your Income Tax

You'll still need to before the deadline for the tax year in which your self-employment ended.

.

See HMRC's video on how to .

Capital Gains Tax if you sell or dispose of assets

If you sell or dispose of business assets - for example buildings, equipment, fixtures and fittings, or even the business' reputation ('goodwill') - you may also need to pay Capital Gains Tax on the 'profit' (or gain) that you make.

You may be able to claim reliefs - particularly  - that may reduce or postpone any gains. If you sell your own assets, you may have Capital Gains Tax to pay too.

There are other to reduce the amount of Capital Gains Tax that you may be able to claim.

Offsetting costs against your tax bill

There will be costs involved in the process of closing down your business including:

• the cost of administration, postage and telephone charges to notify the relevant authorities - eg HMRC, institutions, suppliers and customers
• the cost of professional services from solicitors, accountants, estate agents, etc

Many of these costs may be allowable expenses, which can be offset against your tax bill. See .

Offsetting losses against your tax bill

If you were self-employed and you've made a loss, you may be able to offset this loss against your tax bill for the previous three years.

Read more on .

You must call the as soon as possible if you're registered and stop trading as a contractor or subcontractor.

If you are selling or closing a limited company there are a number of things you need to consider. 

Corporation Tax

If the company or organisation is liable for Corporation Tax, it will still have to file Company Tax Returns and pay Corporation Tax during the closing or winding-up process when the company stops trading.

See .

Closing a limited company

If you are you usually need to have the agreement of your company's directors and shareholders. The way you close the company depends on whether it can pay its bill - known as solvent- or can't pay its bills - known as insolvent.

If you are selling a limited company you should appoint new directors before you resign as a director yourself. You will need to inform Companies House about these changes using .

If you are closing a limited company the way you inform Companies House may be different. See closing a company or partnership.

If you are selling your business, any employees will transfer to the new employer. Therefore, you have a legal duty to inform and consult your employees under the business transfer legislation. Understand your responsibilities to employees transferred out of your business.

Informing and consulting with employees

If you already have an information and consultation (I&C) agreement with your employees, you might choose to use this forum for informing and consulting employees about business transfers.

If you have employees, you'll have certain legal responsibilities to meet when closing your business.

How to handle reduncancies

If you close your business, you will have to make your employees redundant.

Depending on how many employees you have and how long you have employed them for, you will have to:

• make statutory redundancy payments
• inform employees individually - and, if relevant, speak to their representatives
• follow a fair redundancy procedure

See redundancy: the options.

Payroll issues when closing a business

You need to tell HM Revenue & Customs (HMRC) as soon as possible if your business stops employing people you have stopped trading.

Find out how to .

Changes to pension schemes when closing a business

You must inform and consult employees about significant changes to their pension arrangements if you:

• employ 50 or more staff
• offer an occupational pension scheme or contribute to employees' personal pension schemes

Such changes include terminating the occupational scheme or ending your contributions to personal schemes - either of which could happen if you are closing your business.

See know your legal obligations on pensions.

Employee rights when closing down a business

If you close your business, you are required to treat your employees fairly and follow the correct process.

.

If you are VAT-registered and you are closing your business, you will need to inform HM Revenue & Customs (HMRC) that you want to .

Once HMRC are satisfied that your registration should be cancelled, they will confirm the date of de-registration which is usually the date you stopped trading.

You will have to submit a final VAT return for the period up to and including the de-registration date. You must account for VAT on stock and certain assets you have at the close of business on the day your registration is cancelled.

See submitting VAT returns, paying and repayments.

VAT when selling your business

If you are selling your VAT-registered business, you normally have to cancel your VAT registration.

However, in some situations, the new owner of your business can apply to keep your VAT registration number through a .

Whatever the reasons for closing your business, to make the process as easy as possible, you should put together a formal written plan.

To do this, it may be useful to refer back to your original business plan to help make sure you cover necessary areas. You may even have specified procedures in your formation documents to follow when winding up the business. See write a business plan: step-by-step.

Closing a business plan - what to include

Your plan should ideally list everything you need to do under headings, such as:

• tax requirements
• rentals and leases
• closing accounts with suppliers and customers.

Set a specific date or timescale for each task.

Seek professional advice

If your business is small, you will almost certainly need to call on outside specialist professional advisers such as your solicitor, accountant, and financial adviser. If there are assets to dispose of, you may need to use an estate agent, valuer, surveyor or auctioneer.

See choose a solicitor for your business and how to choose an accountant for your business.

Pay the right amount of tax

To make sure you pay the right amount of tax, you will need to collect any money you are owed, and pay all your outstanding bills. This includes your regular operating costs up until the point your business closes, including utility and telephone bills and any payroll obligations.

If you find that disputes arise with creditors or debtors, outside parties can bring an objective viewpoint and help you to reach an amicable settlement. Read how to ensure customers pay you on time.

HM Revenue & Customs (HMRC) expects all customers to make payments when they are due. However they understand that as a result of circumstances outside your control, this isn't always possible. Let HMRC know about tax payment problems.

Letting HMRC know that you have stopped trading or are selling your business will help avoid them issuing unnecessary payment demands to you. .

It is important that your tax and any official records concerning your business are up-to-date when you sell your business.

Business records when selling your business

One of the major reasons for this is that the buyer's solicitors and accountants will have to carry out due diligence checks. This involves gathering information about all aspects of your business so that the buyer can make an informed decision and modify the terms of the sale if necessary. Among other things, they will want to see:

• profit-and-loss statements
• tax returns
• any relevant leases and details of any outstanding loans, with repayment schedules

See undergoing due diligence.

Customers and suppliers

You should also inform all your customers and suppliers so that:

• they have the chance to raise any outstanding payments, credits and liabilities
• you can account for any outstanding payments, credits and liabilities when you finalise your accounts and tax affairs

There are a number of steps to take and points to consider if you want to stop being self-employed.

Notifying HM Revenue & Customs (HMRC)

You must tell HMRC if you've stopped trading as a sole trader or you're ending or leaving a business partnership. Tell HMRC you're . HMRC will then cancel your Class 2 National Insurance contributions.

Finalising your Income Tax

You'll still need to before the deadline for the tax year in which your self-employment ended.

.

See HMRC's video on how to .

Capital Gains Tax if you sell or dispose of assets

If you sell or dispose of business assets - for example buildings, equipment, fixtures and fittings, or even the business' reputation ('goodwill') - you may also need to pay Capital Gains Tax on the 'profit' (or gain) that you make.

You may be able to claim reliefs - particularly  - that may reduce or postpone any gains. If you sell your own assets, you may have Capital Gains Tax to pay too.

There are other to reduce the amount of Capital Gains Tax that you may be able to claim.

Offsetting costs against your tax bill

There will be costs involved in the process of closing down your business including:

• the cost of administration, postage and telephone charges to notify the relevant authorities - eg HMRC, institutions, suppliers and customers
• the cost of professional services from solicitors, accountants, estate agents, etc

Many of these costs may be allowable expenses, which can be offset against your tax bill. See .

Offsetting losses against your tax bill

If you were self-employed and you've made a loss, you may be able to offset this loss against your tax bill for the previous three years.

Read more on .

You must call the as soon as possible if you're registered and stop trading as a contractor or subcontractor.

If you are selling or closing a limited company there are a number of things you need to consider. 

Corporation Tax

If the company or organisation is liable for Corporation Tax, it will still have to file Company Tax Returns and pay Corporation Tax during the closing or winding-up process when the company stops trading.

See .

Closing a limited company

If you are you usually need to have the agreement of your company's directors and shareholders. The way you close the company depends on whether it can pay its bill - known as solvent- or can't pay its bills - known as insolvent.

If you are selling a limited company you should appoint new directors before you resign as a director yourself. You will need to inform Companies House about these changes using .

If you are closing a limited company the way you inform Companies House may be different. See closing a company or partnership.

If you are selling your business, any employees will transfer to the new employer. Therefore, you have a legal duty to inform and consult your employees under the business transfer legislation. Understand your responsibilities to employees transferred out of your business.

Informing and consulting with employees

If you already have an information and consultation (I&C) agreement with your employees, you might choose to use this forum for informing and consulting employees about business transfers.

If you have employees, you'll have certain legal responsibilities to meet when closing your business.

How to handle reduncancies

If you close your business, you will have to make your employees redundant.

Depending on how many employees you have and how long you have employed them for, you will have to:

• make statutory redundancy payments
• inform employees individually - and, if relevant, speak to their representatives
• follow a fair redundancy procedure

See redundancy: the options.

Payroll issues when closing a business

You need to tell HM Revenue & Customs (HMRC) as soon as possible if your business stops employing people you have stopped trading.

Find out how to .

Changes to pension schemes when closing a business

You must inform and consult employees about significant changes to their pension arrangements if you:

• employ 50 or more staff
• offer an occupational pension scheme or contribute to employees' personal pension schemes

Such changes include terminating the occupational scheme or ending your contributions to personal schemes - either of which could happen if you are closing your business.

See know your legal obligations on pensions.

Employee rights when closing down a business

If you close your business, you are required to treat your employees fairly and follow the correct process.

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If you are VAT-registered and you are closing your business, you will need to inform HM Revenue & Customs (HMRC) that you want to .

Once HMRC are satisfied that your registration should be cancelled, they will confirm the date of de-registration which is usually the date you stopped trading.

You will have to submit a final VAT return for the period up to and including the de-registration date. You must account for VAT on stock and certain assets you have at the close of business on the day your registration is cancelled.

See submitting VAT returns, paying and repayments.

VAT when selling your business

If you are selling your VAT-registered business, you normally have to cancel your VAT registration.

However, in some situations, the new owner of your business can apply to keep your VAT registration number through a .

Whatever the reasons for closing your business, to make the process as easy as possible, you should put together a formal written plan.

To do this, it may be useful to refer back to your original business plan to help make sure you cover necessary areas. You may even have specified procedures in your formation documents to follow when winding up the business. See write a business plan: step-by-step.

Closing a business plan - what to include

Your plan should ideally list everything you need to do under headings, such as:

• tax requirements
• rentals and leases
• closing accounts with suppliers and customers.

Set a specific date or timescale for each task.

Seek professional advice

If your business is small, you will almost certainly need to call on outside specialist professional advisers such as your solicitor, accountant, and financial adviser. If there are assets to dispose of, you may need to use an estate agent, valuer, surveyor or auctioneer.

See choose a solicitor for your business and how to choose an accountant for your business.

Pay the right amount of tax

To make sure you pay the right amount of tax, you will need to collect any money you are owed, and pay all your outstanding bills. This includes your regular operating costs up until the point your business closes, including utility and telephone bills and any payroll obligations.

If you find that disputes arise with creditors or debtors, outside parties can bring an objective viewpoint and help you to reach an amicable settlement. Read how to ensure customers pay you on time.

HM Revenue & Customs (HMRC) expects all customers to make payments when they are due. However they understand that as a result of circumstances outside your control, this isn't always possible. Let HMRC know about tax payment problems.

Letting HMRC know that you have stopped trading or are selling your business will help avoid them issuing unnecessary payment demands to you. .