Takeovers - United Kingdom

Updated 02/2011

Legal requirements

Company law in the UK is regulated by the Companies Act 2006. Many of the rules and regulations on starting a new business also apply when buying or taking over an existing one.

Companies Act 2006 [3 MB]

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) covers the terms and conditions of employees who transfer with a business when it is sold.

Transfer of Undertaking (Protection of Employment), 2006 regulations

TUPE depends on the circumstances of the individual case in question, it does not apply for instance in the following cases:

Transfer by share takeover - when a company's shares are sold the same company continues to be the employer;
When a business transfers assets only - when equipment is sold;
Transfers of undertakings situated outside the UK - although similar provisions apply in the EU;
Change of business identity - if the work or organisational structure changes.
Business Link - information on transfers

Retiring business owners need to plan the transfer of their business in advance.

Selling on — United Kingdom

Some standard requirements to be completed when taking over a business are the same as when setting up a new business.

Start-ups — United Kingdom

Administrative procedures

Registration

Business registration

Companies House must be informed if a business has plans to change its name, or about any other changes involving directors and secretaries.

Only a private company limited by shares and an unlimited company with a share capital may re-register as a public company.

A public company may re-register as a private company limited by shares or by guarantee by passing a special resolution and re-registering with Companies House.

Re-registration

Tax registration

If you buy a VAT-registered business as a going concern, you must be registered for VAT at the time of sale unless you are eligible for a VAT exemption.

If you are not VAT-registered, the seller must add non-refundable VAT to the price you pay for the business.

There are additional steps you may need take before and after you buy a business whose assets include capital assets such as:

land;
buildings;
civil engineering works;
refurbishments;
computers and items of computer equipment;
related self-supplies.

Where the value of these items is £250,000 or more, or £50,000 or more in the case of computers and computer equipment, the Capital Goods Scheme (CGS) may apply.

VAT registrations are overseen by HM Revenue & Customs.