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Earn-out deals

Rayney’s Tax Planning for Family and Owner-Managed Companies: 2023/24

Author:
Peter Rayney FCA, CTA (Fellow), TEP
Publisher:
Bloomsbury Professional
Publication Date:
2024
Law Stated At:
6 April 2024
Chapter 15: Selling the Owner-Managed Business or Company Background to earn-outs The Marren v Ingles dicta Anti-embarrassment clauses Election to carry back capital loss on earn-out payments Structuring as a bonus arrangement Worked example of cash-based earn-out Optimising ER on earn-outs Using a ‘profit warranty’ approach Earn-outs satisfied in shares or loan notes Deemed non-QCB treatment under TCGA 1992, s 138A Apportionment of base costs Dealing with actual QCBs/shares issued as earn-out consideration The deemed ‘earn-out’ security and BADR Opting out of deemed TCGA 1992, s 138A deferral treatment Worked example of earn-out satisfied in loan notes (under TCGA 1992, s 138A ) Potential income tax and NIC charges on earn-outs ...

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