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The 2–5 Year Window: Why You Can’t Fix Business Sale Tax in the Final 12 Months

By  George Skelton  ·  2 minute read

One of the most expensive assumptions business owners make is this:

“We’ll sort the tax when the deal is agreed.”

By then, it’s usually too late.

In Ireland, most tax outcomes on a business sale are locked in years before the buyer appears.
The final 12 months are about execution — not optimisation.

Why the Last Year Is the Wrong Time

Once a sale is on the horizon: Why Waiting Until 70 Collapses Your Tax-Free Relief from €10m to €3m (11)

  • Structures are visible

  • Ownership history is fixed

  • Trading status is tested

  • Buyer due diligence begins

At that point, Revenue looks backwards — not forwards.

You can’t rewrite:

  • How long you’ve owned shares

  • Whether the company is truly trading

  • Whether relief conditions were met over time

Tax reliefs reward long-term behaviour, not last-minute adjustments.

The Reliefs That Need Time

Most sale-related reliefs depend on multi-year conditions, such as:

  • Length of ownership

  • Nature of activities

  • Group structure history

  • Use of surplus cash

If these aren’t right well in advance, relief is restricted — or lost.

The sale price may be excellent.
The tax bill may still be brutal.

The Hidden Risk: “Investment Creep”

One of the most common deal-killers isn’t obvious until it’s too late.

Over time, many trading companies:

  • Accumulate cash

  • Buy property

  • Hold investments

Without realising it, the company drifts away from being a pure trading business.

That drift can:

  • Block key CGT reliefs

  • Reduce buyer appeal

  • Force value into higher tax brackets

And it can’t be reversed safely in the last year without triggering tax.

Buyers Lock In Your History

Buyers don’t just buy profits.

They examine:

  • Structure

  • Clean trading status

  • Cash levels

  • Group complexity

Anything unclear increases:

  • Risk

  • Negotiation pressure

  • Price chips

Good tax planning doesn’t just save tax —
it protects the deal itself.

Why 2–5 Years Is the Real Planning Window

The optimal window allows time to:

  • Clean up structure gradually

  • Separate trading and investment activity

  • Preserve eligibility for reliefs

  • Align ownership and exit goals

This isn’t rushed.
It’s controlled.

And it keeps options open.

The Cost of Waiting

Leaving planning too late often means:

  • Paying full CGT when reliefs were possible

  • Accepting buyer-driven structures

  • Losing leverage

  • Watching value leak through tax

The business may be a success —
but the outcome isn’t.

The Planning Prompt

If a sale is:

  • Possible in the next 2–5 years

  • Even loosely on the horizon

Then the key question is not:

“What’s my exit tax rate?”

It’s:

“What needs to be true years before sale to protect value?”

Because when the final 12 months arrive,
the real decisions are already behind you.

 

Contact George Skelton, Tax Partner at RDA Accountants, to discuss your situation in detail and craft a tailored strategy: 

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