The Upper Tribunal (UT) has upheld a homeowner's appeal against a decision that he had not acquired a right of way over part of a driveway belonging to one of his neighbours. The row of houses in which the man and his neighbour lived had originally been...
Here at Tanners, we understand that going through a divorce is a highly emotive and stressful time for you and the process can become ever more complex when your hard-earned business assets are thrown into the mix too. Just like any other matrimonial assets that you and your spouse own such as your home, furniture or a family car, your business is an important consideration in any financial settlement.
Is my business an asset of my marriage?
Ultimately this depends on a number of factors, such as the length of your marriage and when the business was established, whether there are any children of the marriage and the extent that your spouse has contributed to the profitability of your business. If you started or bought your business during your marriage then your business is likely to be thought of as being part of the ‘matrimonial pot’. If you owned your business before you were married but there has been an increase in its value during the marriage, then this can be more complex as it could be that this increase in value is considered as matrimonial.
How can the value of my business be established and what do I need to be mindful of?
The case of Prest v Petrodel Resources Ltd [2013] UKSC 34 has widened the need for Judges to delve deeper into the circumstances surrounding the creation of a company and the purchase of any business assets by that company. This means that Judges are now less likely to accept the fact that an asset held by a company is sufficient evidence of its true beneficial ownership. Establishing the true value of your business and evidencing the requirements in Prest v Petrodel can be difficult. It is often necessary to singularly or jointly instruct a Forensic Accountant to properly investigate the company accounts with a thorough look into the value of the business/shares, business liquidity, any income which you may be able to draw and any potential tax implications. At Tanners, we frequently engage experienced and skilled Forensic Accountants for this purpose. This enables considered decisions to be made regarding a financial settlement and how the business value plays into that..
Many businesses are what are commonly referred to as an ‘income generating business’. For example, a ‘one man band’ type business is likely to be regarded as having little or no value. This is because if the business were sold it would then remove the income generated by it.
What can the court do about your business?
Ultimately, should your spouse claim that they are entitled to a share of your company, the courts would rarely force you to sell your business in order to fund a financial settlement. That would be a last resort. . The Court could however take the company value into account in the financial settlement. In such circumstances your spouse may receive a larger share of the other assets to offset the company value. Another alternative is for the Court to order you to pay your spouse ongoing maintenance without the need to share any portion of your company.
At Tanners, we appreciate that every marriage and every situation is different and we therefore offer bespoke advice throughout your divorce and financial proceedings, to ensure that any financial settlement is feasible in reality, and without impacting the way your business operates.
We use our extensive experience and expertise to get the best possible deal for you ensuring that your business is protected as far as possible. We do our upmost to help you find a solution that maximises your interests and sets you up for a positive future.