THE BEST WAY OF SELLING ASSETS
GH writes: I operate as a sole trader in the IT sector and have been setting up various online businesses for myself. Now somebody wants to buy one of these and combine it with his existing online business.
Is it best to put my venture into a limited company before I sell and, if so, how do I do that?
Also, what are the tax consequences of any sale?
It often depends on what the buyer wants but I suspect that it will not be necessary for you to transfer your online business into a separate company just to facilitate the sale, writes Chris Lane, partner at Kingston Smith LLP.
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Normally, buyers will check what they are buying and will carry out their own due diligence. Even if you put all the relevant assets into a new company, the buyer would still need to carry out the same due diligence.
You should think of it as simply selling a list of assets. As part of the process you will need to document the assets and this will form a big part of the sale and purchase agreement.
From a tax point of view, there will be capital gains tax (CGT) to pay on any profit arising from the sale. Potentially, your first £1m of gain is covered by entrepreneurs' relief and, as long as you have not already used this relief, will be taxable at 10% rather than the normal CGT rate of 18%. You will also have your annual allowance of £10,100 for the current year to reduce your taxable gains.
SACKING STAFF FOR LENGTHY SICKNESS
HS writes: One of my employees is off with work-related stress. He has been absent for nine months and we are none the wiser about whether he intends to come back to work. I wish to arrange a home visit to discuss options. Am I entitled to do this and, if I feel the situation is not being resolved, can I dismiss him?
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Long-term sickness is one of the most difficult problems for management to tackle, writes Peter Done, managing director of Peninsula. Employers often find themselves stuck between a rock and a hard place, trying to decide whether to replace the worker because the job needs doing, or aiding the sick person's recovery by offering the assurance of job security.
However, you are not acting unreasonably in seeking clarification on this employee's intentions. Keeping in touch with him could be helpful to both of you and is therefore advisable.
You say the stress is work related, so you must tread carefully. In the circumstances it may be stressful for the employee to have you in his home.
Write to him and suggest a meeting. If the employee agrees to a meeting at home, then go ahead and arrange this. However, it may be better to chose a neutral meeting place - not the employee's home or the workplace.
It is a common myth that you cannot dismiss an employee who is on long-term sick leave - you can. Fundamentally, if, after thorough investigation, it is not possible for this person to do his job because of his health, you can carry out a "capability" procedure, and then dismissal is an option.
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Tribunal judgments show that just because an employer has been the cause of an employee's incapacity does not make it impossible for the employer to dismiss the person fairly. The key factor is the reasonableness of your actions.
Nonetheless, it may be necessary for you to make extra effort to find other work for this employee, or put up with a longer period of absence before dismissal is considered than for other sickness absences. You should be particularly careful if the employee's absence is covered under a contractual sick pay scheme.