Buy or invest in turnkey businesses across various sectors with Fraser Bond's commercial property expertise.
Buying a business is not buying a property with a shop in it. One decision governs everything that follows: asset purchase or share purchase. It determines whether you inherit the seller’s liabilities, whether the contracts continue automatically, whether the staff transfer under TUPE, and whether VAT is charged at all. Get it wrong and the tax and the risk both land in the wrong place — and neither is fixable afterwards.
On an asset purchase you buy the trade and the assets and generally leave the liabilities behind — but contracts must be novated and the landlord must consent. On a share purchase the contracts continue untouched and you inherit the company’s entire history, including its tax and its claims.
On an asset purchase the employees transfer automatically under TUPE on their existing terms, with continuity of service, and liability for pre-transfer acts passes to you. The seller must provide employee liability information at least 28 days before transfer. We ask for it early.
On most small businesses the lease is the most valuable asset and the biggest risk. Consent to assign takes time, usually requires an authorised guarantee agreement from the seller, and can be refused on reasonable grounds. A deal that ignores it until exchange is a deal that slips.
Our fee is paid by the vendor. No buyer fee and no retainer — and no reason for us to talk up a business whose accounts do not support the asking price.
A trading business you will run, a business you will manage at arm’s length, or premises with a trade attached that you intend to change. Those need different targets and completely different diligence.
Assets or shares, three years of accounts, the lease and its unexpired term, the staff list and TUPE position, licences and their transferability, and whether the sale is capable of qualifying as a going concern for VAT.
Deferred consideration, earn-outs, retentions against warranty claims, restrictive covenants on the seller and a handover period are all part of the price. On a small business they frequently matter more than the headline number.
On an asset purchase you buy specified assets — goodwill, equipment, stock, the lease, the customer list — and you leave the selling company behind with its history. You generally do not inherit its tax position, its litigation or its unknown liabilities. The price is you have to take assignments and novations one by one: the lease needs the landlord’s consent, key contracts need counterparty agreement, and licences must be transferred or reapplied for.
On a share purchase you buy the company itself. Every contract, lease, licence and employee stays where it is because nothing has changed hands except the shares — which is why share sales are usually preferred where contracts are hard to novate. But you also inherit everything: historic tax, employment claims, product liability, the lot. That is what warranties, indemnities, disclosure and a retention are for, and it is why a share purchase costs more in legal fees than an asset purchase almost every time.
Where a business or part of a business transfers as a going concern, the Transfer of Undertakings (Protection of Employment) Regulations 2006 apply. Employees assigned to the transferring business move automatically to the buyer on their existing terms and conditions, with continuity of service preserved, and liability for most pre-transfer acts and omissions passes to the buyer as well. Dismissing someone because of the transfer is automatically unfair.
The seller must provide employee liability information at least 28 days before the transfer: names and ages, written particulars of employment, disciplinary and grievance records or live cases from the last two years, collective agreements, and claims made or likely to be made in the past two years. If it is not provided, is inaccurate, or is not updated, a tribunal can award the buyer compensation of at least £500 per affected employee.
Both parties also have duties to inform and, where measures are envisaged, to consult employee representatives. On a small business this is frequently the thing that is left too late, and it is the thing that turns a straightforward acquisition into a claim.
A sale that qualifies as a transfer of a business as a going concern is treated as neither a supply of goods nor of services, so no VAT is charged. On a business with a property element that is a substantial cash-flow and stamp duty difference, because SDLT is charged on the VAT-inclusive consideration.
The core conditions are that the buyer carries on the same kind of business, that there is no significant break in trading, and that where the seller is VAT registered, or liable to be, the buyer is too. Where property is involved and the seller has opted to tax, two further steps are needed: the buyer must validly opt to tax the property and notify HMRC by the relevant date — normally completion, or the date of any deposit if earlier — and must notify the seller that the option will not be disapplied under the anti-avoidance rules.
On most small trading businesses the lease is the single most valuable asset and the single largest risk. Establish the unexpired term, whether it is inside or outside the Landlord and Tenant Act 1954, the rent review pattern, the repairing obligation, and any break rights and their conditions. A business with three years unexpired and no security of tenure is a different asset from the same business with twelve years inside the Act.
Then the consent. Most leases prohibit assignment without the landlord’s consent, not to be unreasonably withheld, and the landlord will normally require an authorised guarantee agreement from the outgoing tenant under the Landlord and Tenant (Covenants) Act 1995, references, and sometimes a rent deposit or guarantor from you. Consent takes weeks at best. Build it into the timetable rather than discovering it three weeks before you hoped to complete.
Several things a trading business depends on do not simply move with it on an asset purchase. A premises licence under the Licensing Act 2003 must be transferred by application, and the designated premises supervisor named on it has to be varied. Food business registration is specific to the operator. Environmental permits attach to operator and site. Franchise agreements, supplier terms and card processing arrangements all typically need consent.
On a share purchase most of this stays in place, which is one of the strongest practical arguments for that structure where a business is licence-heavy. But check for change of control clauses — many contracts and some licences allow the counterparty to terminate if the ownership of the company changes, which defeats the advantage entirely if nobody looks.
For a seller, Business Asset Disposal Relief reduces the capital gains tax rate on qualifying disposals up to a £1 million lifetime limit. The rate has been rising: it was 10%, then 14%, and from 6 April 2026 it is 18%. The qualifying conditions include a 24-month period during which the company is the individual’s personal company and a trading company, and the individual is an officer or employee.
Separately, from the same date, business property relief for inheritance tax gives 100% relief only on the first £2.5 million of combined business and agricultural property, with 50% above — transferable between spouses, and refreshing every seven years. Both changes affect what a seller nets and therefore what they will accept, so they belong in the negotiation rather than being discovered by their accountant afterwards.
On an asset purchase, yes — automatically. Under TUPE, employees assigned to the transferring business move to you on their existing terms with continuity of service preserved, and liability for most pre-transfer acts passes to you. Dismissing someone because of the transfer is automatically unfair. The seller must give you employee liability information at least 28 days before the transfer, covering names and ages, written particulars, disciplinary and grievance records from the last two years, collective agreements and any claims. If they do not, a tribunal can award you at least £500 per affected employee.
Not if the sale qualifies as a transfer of a going concern, in which case it is treated as neither a supply of goods nor services and no VAT is charged. The core conditions are that you carry on the same kind of business, that there is no significant break in trading, and that you are VAT registered or liable to be where the seller is. If property is included and the seller has opted to tax, you must also opt and notify HMRC by the relevant date, and notify the seller that the option will not be disapplied. TOGC is not elective — it applies if the conditions are met, whatever the contract says.
Weeks at best, and it is the most common cause of a delayed completion on a small business sale. Most leases prohibit assignment without consent, not to be unreasonably withheld, and the landlord will usually want references, an authorised guarantee agreement from the outgoing tenant under the Landlord and Tenant (Covenants) Act 1995, and sometimes a rent deposit or guarantor from you. Start it as soon as heads of terms are agreed rather than treating it as a conveyancing step, and make sure your timetable and any deposit arrangements reflect the risk that it is refused.
On a share sale an individual seller may qualify for Business Asset Disposal Relief on the first £1 million of lifetime gains, but the rate has been rising — from 10%, to 14%, and to 18% from 6 April 2026. Business property relief for inheritance tax was also capped from the same date, at 100% on the first £2.5 million of combined business and agricultural property with 50% above. It affects you because it changes what a seller nets, and therefore what they will accept and which structure they will push for. Better to have that on the table during negotiation than to discover it when their accountant does.
