16. Tax Strategy That Minimises Unpleasant Surprises

Plan for post-sale taxes so you keep more of what you have earned

Problem Statement

Plenty of owners focus on the magic headline number. They picture the sale price in the bank, maybe subtract a bit for debt, then start thinking about boats, mortgages or time off. Tax turns up as a vague “we will sort that with the accountant” footnote.

When the real calculations arrive, the mood can flip quickly. Company tax on the gain. Depreciation clawback. Personal tax on drawings or earn outs. Maybe some historic issues that surface once advisers start digging. The cheque you thought you were getting shrinks. Buyers feel the tension. Deals wobble when owners suddenly realise that the number in the contract is not the number in their pocket.

What An Owner Might Say

“If I get five million for the business I will be set. I just need to figure out the tax part later.”

“The buyer wants an asset sale, my adviser prefers shares. I am not sure which leaves me better off after tax.”

“I keep hearing about imputation credits, capital accounts plus shareholder loans. I just want to know what I actually get to keep.”

Why It Happens

Owners are used to thinking about tax one year at a time. You send the books to the accountant, sign the returns, pay what is due, move on. A sale is different. It is a once in a career event where timing, structure and historic decisions all collide in one big calculation.

The rules feel technical. Words like capital gain, revenue account property, depreciation recovery, earn out, look through, personal services income. None of that is why you started a business. It is easy to switch off or to assume that a clever structure can tidy everything at the last minute.

There is also a natural focus on price negotiation. You spend energy on getting the highest headline number, not on comparing after tax outcomes across different structures. In my view that is how owners end up winning the wrong argument. They secure a proud price, then quietly lose a chunk to tax they could have managed with earlier planning.

What To Do About It

Begin with a personal target, not just a deal target. Ask yourself what you need after tax to clear debt, look after family, invest for the next chapter and sleep well. Share that number with your accountant so they understand the goal. It anchors later decisions about structure and timing.

Next, get a clear picture of your starting point. That means current company structure, shareholder loans, historic asset purchases, goodwill, brand or IP values, retained earnings plus any large provisions sitting on the balance sheet. Your adviser can then sketch how tax would land if you sold tomorrow under a simple share sale or asset sale. Treat this as a health check rather than a commitment.

Use that sketch to compare structures, not just labels. A higher purchase price in an asset sale may leave you worse off than a slightly lower share sale once company tax, personal tax and any double taxation risk are considered. Ask your adviser to show you two or three worked scenarios in plain language. “If we do it this way, here is roughly what you keep” is the level you need.

Look carefully at shareholder current accounts plus loans. Where you have funds owed to you by the company, repayments might be received tax free if handled correctly. Where you owe the company, that balance may need to be cleared or built into the deal. Untangling these accounts early can prevent nasty surprises during due diligence.

Plan how you will handle assets that sit close to your personal life. For example, property held in a related entity, vehicles used privately, IP you developed before the company existed. Decide which parts are in the sale, which are out and how tax will treat any transfers or licences. Getting this wrong can create both tax pain and buyer confusion.

If you are several years out from exit, consider gentle pre sale moves. That might include tidying intercompany loans, regularising director remuneration, addressing any aggressive historic positions and simplifying the structure. Early action gives time for patterns to bed in so you do not look like you reshaped everything purely to avoid tax.

Throughout this work, remember that good tax planning stays inside both the law and the spirit of it. Fancy schemes that rely on aggressive interpretation may impress at a barbecue, although buyers and their advisers tend to be unimpressed. A clean, explainable position is worth more than a clever trick that makes everyone nervous.

How To Keep The Momentum

Build tax into your exit planning rhythm rather than treating it as a single meeting near the end. Once a year, sit with your accountant to update scenarios based on current profit, structure and likely timing. Ask what has changed in legislation or IRD practice that might affect a sale. Capture decisions in short notes so you can see the story over time.

Keep all shareholders aligned. If different owners have different tax profiles or expectations, resolve that before negotiations with buyers get serious. Misunderstandings between shareholders often blow up just as terms are being finalised. Better to thrash out fairness inside the tent than to argue in front of purchasers.

Stay honest about what you do not understand. Tell your adviser when language or diagrams stop making sense. Ask for explanations in normal English. You are signing documents that will shape your financial life for years. No professional worth their salt minds explaining twice.

As offers emerge, revisit the numbers. A headline price tweak, an earn out component or a vendor finance piece can all shift tax outcomes. Before you say yes to a structure that suits the buyer, confirm that it still lands you where you need to be after tax. Sometimes a slightly different shape can leave both sides better off.

Golden Nugget

“The real sale price is the amount that lands safely on your side of the IRD line.”

How RegenerationHQ can help

RegenerationHQ does not replace your tax adviser. In my view the best results come when everyone plays to their strengths. What we do is help you ask better questions, see the big picture plus connect tax planning to your wider exit goals.

Support often begins with a practical discussion about your after tax needs, your current structure and your exit horizon. From there we work alongside your accountant to turn technical scenarios into plain language options. That can include helping you weigh trade offs between price and structure, preparing for conversations with family shareholders and making sure tax strategy is reflected in your broader exit roadmap.

The outcome is a sale plan where tax is not a nasty surprise near the end. It becomes another lever you have considered in advance so that when you finally sign, you can be confident you are keeping as much of what you have earned as the rules sensibly allow.

If you want a steady guide beside you while you get ready for one of the biggest decisions of your working life, RegenerationHQ is ready to help you walk that road with clarity and confidence.