From the day the sale completes, you are responsible for the business. Some of what it needs to keep trading comes with it. The rest you have to set up yourself, and which is which depends on whether you bought the shares in a company or the assets of a business.
Shares or assets: what moves with the business
When you buy the shares in a limited company, the company stays the same legal person. It is still the employer, so its staff, payroll and VAT registration carry on. What changes is who owns and controls it, and the company must tell Companies House about new directors and people with significant control within 14 days.
When you buy a business's assets, such as its premises, stock, equipment and goodwill, you become its new owner and its new employer. The staff usually transfer to you, but registrations and approvals held by the seller do not.
| Share purchase | Asset purchase | |
|---|---|---|
| Employer | The company, unchanged | You, from the transfer, with staff on their existing contracts |
| PAYE | The company's existing scheme | Register as an employer before the first payday |
| VAT registration | The company's existing registration | Your own, or the seller's number if HMRC agrees to transfer it |
| Companies House | New directors and people with significant control reported within 14 days | No change to the seller's company |
| Employers' liability insurance | The company's cover | Your own cover from the day you employ staff |
| Customs and excise approvals | Held by the company | Apply again |
Taking over the seller's VAT number
On an asset purchase, you and the seller can apply together to move the seller's VAT registration number to you, online or on form VAT68. If HMRC agrees, you also take on any VAT the seller still owes on that registration. Moving the VAT number does not move any customs or excise registration or approval.
Staff who come with the business
On an asset purchase, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) usually apply. TUPE does not apply to a share purchase, because the employer does not change.
Under TUPE:
- Employees keep their terms and conditions, holiday entitlement and continuous service.
- You take on the seller's liabilities to those employees, so a claim about something the seller did can be brought against you.
- You cannot change their terms, or dismiss them, because of the transfer itself.
- The seller must give you written information about each employee, including recent disciplinary action, grievances and claims, at least 28 days before the transfer.
- Before the transfer, the seller must inform and consult the staff's representatives, so you must tell the seller about any changes you plan for the staff.
Using your first 90 days
Staff, customers and suppliers chose to work with the business as it was. Learn how it runs before you change it.
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Meet each employee one to one in your first week
Ask what they do, what works and what worries them. Do not promise changes you have not decided on.
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Check cash, payroll and insurance every week
Review the bank balance, money owed to and by the business, and that each payroll run and insurance policy is in your name or the company's.
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Introduce yourself to the biggest customers and suppliers in your first month
Find out which customers bring in most of the money and which suppliers the business could not trade without.
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Watch how the work is done before changing a process
A process that looks wasteful may exist for a reason you have not seen yet.
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Write a 12-month plan after about 90 days
Pick the few changes that matter most, involve the staff who know the work, and tell employees, customers and suppliers what will change.
Legal basis
Primary legislation and key regulations