New queries, issue 4589

Sale of a business

A business appears to have been sold by the directors rather than the company.

Mr and Mrs P ran a grocery store in partnership for about ten years before incorporating the business five years ago (O Ltd). No goodwill was transferred on incorporation and two shares were subscribed for by the partners. The freehold of the business premises was retained by Mr P and a market rent was charged to the company.

In 2015 the couple retired and sold the business for £110 000 – £55 000 for goodwill £5 000 for the assignment of the lease and £50 000 for fixtures and fittings. Stock was valued at £25 000 and was purchased separately. The property was retained by Mr P. In case it is relevant half of the sale proceeds were paid on completion and the balance is being...