Readers’ forum: Deferred consideration

I am advising a client on the sale of her company – the details are not fixed but it is very likely that the deal will be for a mixture of cash on day one and a further instalment of cash 18 to 24 months later.

I am trying to get my head around the various ways that deferred consideration is taxed.

I’m clear that if the sale is for say £1m upfront and £1m in 24 months’ time the whole of the £2m is taxed upfront. Equally I am clear that if the sale is for £1m upfront and a further payment after 18 months of 10% of the profits earned in the first year after the sale we are in Marren v Ingles territory and the value of the right to receive further consideration is taxed upfront.

But what about a mixture of...