One of the UK’s most successful business women is planning to sell her company ahead of April in order to avoid the planned rise in capital gains tax (CGT), it has been reported.
Linda Bennett, the founder and owner of the LK Bennett fashion chain, has announced that she wishes to exit ahead of April when the proposed changes take affect, according to The Times.
Bennett is refusing to comment on the potential sale price but it is thought that Rothschild the bankers, which will be handling the sale, is expecting a price in the region of £150m.
However, the entrepreneur has said that she hoped that a new owner would help to take the luxury brand on to the international stage.
“The business has been transformed over recent years and is in a very strong financial position,” said Bennett in an interview with The Times.
“It does not need more money but it can grow faster with more capital.
“We realise we now need to start thinking about international expansion and therefore feel it is a good time to look at a different structure for the business.”
However, Bennett’s decision to push a sale through before April may be a bad idea according to tax experts.
“The pitfalls of selling a business in a hurry could actually wipe out the benefits of paying the current, lower CGT rate,” says Lindsay Pentelow, a tax partner at international accountancy and advisory firm Mazars.
Pentelow advises entrepreneurs not to rush to exit because of CGT and that they shouldn’t be too swayed by media reports.
“The real position is always more nuanced than the headlines,” she says. “If you are in the process of a sale, or have already sold with deferred consideration, look to close by April.
“But by chasing a quick sale for tax reasons alone, you my lose more value than you save. And with good tax planning, this may be unnecessary.”
© Crimson Business Ltd. 2007