The Tax-Only, deal-ready playbook
Scope. You are acquiring a trading UK limited company (LTD) that owns and runs an Italian restaurant. This guide focuses only on tax—what drives price, what creates risk, and what must be engineered in the SPA and the first 100 days post-completion.

1) Deal Route Drives Tax: Share Purchase vs Business & Assets
A. Share purchase (buying the LTD’s shares)
Stamp Duty on shares: 0.5% of consideration (rounded up to the nearest £5). No VAT on the share purchase.
Attributes retained: All tax attributes stay in the company (losses, capital allowances pools, VAT history), subject to anti-avoidance limits (see §5).
You inherit tax history: All VAT/PAYE/CJRS/tronc exposures, s.455 on any overdrawn director loan account (DLA), historical errors in rates/records.
Goodwill and intangibles: No step-up in the company’s tax basis just because the shareholder changed. Relief for goodwill is highly restricted—assume no CT deduction unless specifically modelled under CTA 2009 Part 8 rules.
Property/lease: If the company holds a lease or freehold, you inherit historic capital allowances profile and any fixtures decisions.

When to prefer: Maximum continuity (licensing, staff, suppliers, merchant accounts) and a clean DD outcome with tailored tax indemnities.

B. Business & assets purchase (out of the LTD)
VAT / TOGC: Aim for Transfer of a Going Concern (no VAT on the transfer) if conditions are met (you continue the same kind of business; you’re VAT-registered at or immediately after completion).
SDLT: Applies if a property interest transfers (freehold/lease premium).
Fixtures election (s.198 CAA 2001): Agree a written election to lock the capital-allowances basis on plant/fixtures and avoid double taxation.
New tax footprints: New PAYE/VAT registrations (unless hived into an existing entity); TUPE for staff; re-papering suppliers and merchant acquirers.

When to prefer: You want a clean slate and/or a basis step-up for acquired plant & machinery and other qualifying assets, accepting extra work on licensing and contracts.

2) Immediate Transaction Taxes
Stamp Duty (shares): 0.5% of price; file and pay promptly to avoid penalties.
VAT (assets): TOGC targeted; if TOGC fails, VAT may be due on standard-rated assets (but not normally on the grant/assignment of most commercial leases).
SDLT (property/lease): Model non-residential rates; confirm rent vs premium treatment; pre-agree managing agent statements for apportionments.
Seller CT/PIT: Affects negotiation and price (availability of SSE for corporate sellers; CGT for individual sellers). Buyer doesn’t pay it, but pricing and structure change if the seller needs instalments/earn-outs for tax efficiency.

3) VAT in Hospitality: what you’re really buying
Even on a share deal you inherit the VAT posture. DD must reconcile EPOS Z-reads to VAT returns and test the following:

Rates integrity: Historic reduced-rate periods, dine-in vs takeaway, cold vs hot food, promotions, set menus, staff meals, service charges.
Deposits & vouchers: Timing of VAT point of taxation on deposits/gift cards; breakage accounting.
Delivery platforms: Commission deductions and VAT treatment; who is principal vs agent.
TOGC pack (if assets): Evidence of continuing the same business; buyer VAT registration timing; options to tax (if property is involved); partial exemption (rare in restaurants but check events/catering arrangements).

4) Employment taxes specific to Restaurants
These are tax exposures (not HR) and price-sensitive:

Tips & tronc
Is there a genuine independent troncmaster? If the employer exerts control, tips can become earnings subject to PAYE/NIC.
Discretionary service charge must be discretionary in practice.
Quantify potential arrears, interest and penalties; ring-fence with a targeted tax indemnity.
PAYE/NI
Right-to-work doesn’t create tax, but HMRC will leverage PAYE/NIC where wages/hours are misstated.
Uniform/meal deductions can push effective pay below NMW—an HMRC trigger often followed by PAYE scrutiny.
Historic CJRS (furlough)
In share deals, you inherit CJRS claims; misclaims come back as income tax/NIC liabilities plus penalties. Require a CJRS-specific warranty/indemnity.

5) Corporation Tax attributes and anti-avoidance
Trading losses and other carried-forwards
Subject to change of ownership + major change in trade restrictions (anti-loss buying).
Losses may be streamed against the same trade only; group relief limits and deductions allowances may apply.
Don’t pay for losses until a tax modeller has shown they survive the acquisition and are usable against future profits.
Capital allowances
Kitchens, extraction, HVAC, cold rooms, bar fit-outs, lighting: build a schedule of qualifying plant & machinery.
Post-deal, commission a capital-allowances review to capture historic under-claims. This often pays for the review.
Intangible fixed assets (Part 8 CTA 2009)
Relief for goodwill is narrowly available; treatment for customer-related intangibles differs. Assume no goodwill relief unless modelled.
Brand/recipes/website may be within or outside Part 8—catalogue and test each item.
s.455 CTA 2010 (overdrawn DLA)
If the company’s director loan account is overdrawn at a CT return date, a temporary tax charge can arise.
Deal with DLAs via pre-completion repayment or purchase-price adjustments; secure a specific indemnity.
Transfer pricing / management charges (if any propco/opco or cross-border support):
Restaurants rarely trigger TP in a stand-alone SME—unless there’s an overseas shareholder entity or propco charging the opco. If there is, document arm’s length.

6) Property & Fixtures (Tax Levers often missed)
Fixtures election (s.198 CAA 2001): On any deal involving property/fixtures, agree an election with the seller to fix the disposal/acquisition value of fixtures. This prevents future disputes and secures the buyer’s capital-allowances basis.
Service charges & premiums: Ensure the tax treatment is aligned (capital vs revenue; SDLT for premiums).
De-recognised assets: Old refurb costs with no allowances history are common—reconstruct and claim where eligible.

7) SPA Tax Engineering (Share Deals)
Build tax into the contract, not just the data room:

Tax covenant covering pre-completion periods (corporation tax, PAYE/NIC, VAT, s.455, CIS if applicable).
Specific indemnities for:
Tronc/tips and service charges,
CJRS (furlough) claims,
VAT rate errors on dine-in/takeaway/promotions,
Overdrawn DLA at completion,
Any open HMRC enquiries.
Completion accounts that isolate tax-sensitive items (accrued holiday pay, VAT creditors, PAYE/NI, deferred income on vouchers).
Retention/escrow released after HMRC enquiry windows reasonably pass.
Covenants on conduct of pre-completion periods (no dividends/bonuses beyond agreed leakage; no change of accounting policies impacting tax).

8) SPA Tax Engineering (Business & Assets)
TOGC clause with cooperation obligations (buyer VAT registration timing; continuation of trade).
s.198 election for fixtures; schedule of plant & machinery with agreed values.
Apportionments for stock (carry raw vs finished goods at agreed policy) and for prepaid items (rent/rates/insurance).
TUPE taxes: Agree responsibility for pre-transfer PAYE/NIC and any historic under-withholding.

9) Financing, withholding and interest Deductions
UK bank debt: Generally no withholding tax on interest.
Overseas or shareholder loans: UK withholding tax (20%) may apply unless an exemption/treaty relief is secured (e.g., quoted Eurobond exemption, treaty claim, or bank exemption).
Interest deductibility: Ensure the company has loan relationship documentation; watch thin capitalisation/transfer-pricing if funding from connected parties.

10) Day-1 to Day-100 Tax Tasks (Buyer’s Checklist)
Day 1–10

File Stamp Duty (share deals).
Secure bank mandates for tax payments; update HMRC authorisations.
Freeze processes that create VAT/PAYE drift (discounts, vouchers, staff meals).

Day 11–40

VAT mapping: EPOS→VAT return; confirm rate logic, deposits/vouchers, delivery fees.
PAYE health check: Tronc governance, RTI integrity, holiday pay method.
Capital-allowances scoping: Site walk-through; collate old invoices/photos/specs.

Day 41–100

Implement agreed s.198 fixtures election (if relevant).
Submit any amended VAT errors on a voluntary disclosure basis (if material).
Lock a quarterly tax pack: EPOS control account, VAT reconciliation, tronc summary, payroll variance analysis.
Prepare corporation tax forecast reflecting allowances you’ve identified.

At Vectigalis Tax www.vectigalistax.co.uk we support buyers and sellers of hospitality businesse with technically rigorous tax work:

Pre-deal structuring & modelling: Share vs assets; Stamp Duty/SDLT/VAT/TOGC; loss survivability; goodwill/Part 8 analysis; funding and WHT planning.
Tax due diligence (hospitality-specific): VAT rate testing from EPOS, deposits/vouchers timing, tronc/PAYE/CJRS, s.455/DLA, capital-allowances baseline, property/fixtures and licensing tax impacts.
SPA tax engineering: Tailored tax covenant, targeted indemnities, s.198 fixtures election, completion accounts mechanics, retentions and escrow design.
Post-completion execution: Voluntary disclosures (where prudent), capital-allowances claims, quarterly tax packs, VAT control remediation, PAYE/tronc governance.

Confidential review of a live target: angelo@vectigalistax.co.uk
Learn more: www.vectigalistax.co.uk

This is general information, not advice. Tax outcomes turn on specific facts and current law. Obtain tailored advice before committing to any structure or SPA terms.