Selling A Business During Divorce: What Business Owners Need To Know

During a divorce proceeding, it’s crucial to be cautious about your actions as any attempt to conceal assets from your spouse may have severe repercussions.

The ability to sell a business depends on the ownership structure. Directors of limited companies can sell their company if their spouse is not involved, but sole traders cannot sell their business as both the owner and the firm are legally the same entity. Sole traders can stop their business and sell assets at any time. Regardless of the ownership structure, all income from the sale of the business and its assets must be reported to HMRC and declared in divorce proceedings. Consulting a legal expert as soon as possible is key, so you can ensure that there will be no unexpected surprises during the process.

To sell a family business before a divorce, the explicit consent of the spouse is required if both parties are involved in its operations. Alternatively, either party may buy out the other to take full control of the business.

Hiding assets from your spouse during divorce can result in a financial penalty or even imprisonment. The court can act if it believes you are deliberately hiding wealth or reducing your liabilities. The court may even reopen a case and amend a settlement should it be discovered that assets were deliberately hidden. Your spouse can also start divorce proceedings early and move to block the sale via an injunction. It is recommended to have a full-service law firm on your side for guidance and support throughout the process.

Thursfields is a full-service law firm that offers legal assistance for various matters, including family law, corporate and commercial law, and wealth management. We take the time to understand each client’s specific circumstances and formulate a customised plan to achieve their goals. For further insight read “What Happens to a Business in Divorce”. For advice contact our Family Law team on 0345 207 3728 or info@thursfields.co.uk