United Kingdom guides

What should I check before buying a business in the UK?

Due diligence means checking the business yourself before you commit, rather than taking the seller's word for it. In the UK a useful amount of that checking is free: Companies House publishes a company's officers, filing history, registered charges and insolvency information at no cost, HMRC will confirm a VAT number, and employment tribunal decisions from February 2017 onwards are searchable. What free searches cannot cover — the lease, the licences, the tax treatment, and what TUPE hands you along with the staff — is where an accountant and a solicitor earn their fee.

By the bizflip team · Published 15 September 2026 · Facts checked 15 September 2026 · Sources listed below

Due diligence is the part of buying a business where you stop taking the seller's word for things. The work splits into three: check the numbers against records the seller did not prepare, check the things the business needs in order to keep trading — the lease, the licences, the key contracts — and check what liabilities come with it. A fair amount of the first and third can be done from your desk, free, before you have paid an adviser anything. This guide covers the UK-specific checks, and says plainly where a familiar overseas mechanism has no British equivalent.

The searches to run before you spend anything

If the seller trades through a limited company, a surprising amount is already public. Companies House charges nothing for it.

This is also where an Australian or American checklist stops being useful. An Australian buyer runs a cheap online search of the Personal Property Securities Register and learns whether money is owed on the vans and the ovens. The UK has no register of that kind. For a company, security over its assets shows up as mortgage charge data on the Companies House record — a charge must be delivered to Companies House within 21 days, and one that misses the deadline needs a court order to register, so the register is reasonably complete for companies that borrow through conventional lenders. For a sole trader or an ordinary partnership there is no Companies House record at all: no charges, no accounts, no officer history. Limited liability partnerships and limited partnerships are registered at Companies House, however, so search before assuming there is nothing there. Everything you would otherwise have searched has to be asked for instead — the hire purchase, lease and asset finance agreements for every significant item, plus a written settlement figure from each lender. Two partial substitutes are worth knowing about: security given by an individual over goods can be registered as a bill of sale at the High Court, and outstanding finance on vehicles shows up on a private HPI-style check.

What the public record will not tell you

Companies House is a repository, not an auditor. Its own service information says it does not have "the statutory power or capability to verify the accuracy of the information that companies send to us", and that information appearing on the public record "should not be taken to indicate that Companies House has verified or validated it in any way". Identity verification for directors and people with significant control became a legal requirement on 18 November 2025. That date opened a 12-month transition period, so an existing director or PSC of the company you are looking at may not have verified yet — check the record rather than assuming. And verification only confirms who someone is. It does not make their figures true.

Filed accounts are also thinner than buyers expect. Small companies and micro-entities currently do not have to deliver a directors' report or a profit and loss account to Companies House, so what you download may be a balance sheet and notes with no trading figures at all. That changes from 1 April 2028, when small companies must deliver a profit and loss account and abridged accounts are no longer an option. Until then, treat the filed accounts as a cross-check and ask the seller for the full statutory accounts.

The financials, independently

Ask for at least three years of full statutory accounts, the management accounts since the last year end, bank statements covering the same period, VAT returns, PAYE submissions, corporation tax computations, and aged debtor and creditor listings. Expect them in a data room rather than as email attachments — bizflip's is free — because a seller who is casual about how financials are shared is often casual about what is in them.

Two questions run underneath all of it. Does the reported profit reconcile to the bank statements and the tax filings, or only to a spreadsheet the seller prepared? And how much of the quoted profit depends on the seller personally — their relationships, their trade qualification, their unpaid hours? Earnings that assume an owner working sixty hours a week for no salary are not earnings you inherit unless you work those hours too. Our guide to how much a business is worth covers which adjustments to earnings a buyer should accept and which to challenge.

Missing records are themselves a finding, because the retention periods are set by law. A company must keep its accounting records for six years from the end of the last financial year they relate to (that is the tax-records requirement; company law sets a shorter three-year minimum for a private company, so six years is the standard to hold a seller to, not the only period they may point at), and longer where the records cover transactions spanning more than one accounting period, an asset expected to last more than six years, a late return, or an open HMRC compliance check. PAYE records must be kept for three years from the end of the tax year they relate to. National minimum wage records must be kept for six years, up from three before 1 April 2021. If a seller cannot produce records they were obliged to keep, that is information about how the business has been run.

The employees, and why TUPE is not optional

On an asset purchase where the business keeps its identity, the Transfer of Undertakings (Protection of Employment) Regulations 2006 usually apply: employment terms and conditions transfer, continuity of employment is maintained, and regulation 4(2) transfers "all the transferor's rights, powers, duties and liabilities under or in connection with" the employment contracts to the buyer. Neither side can pick and choose who moves. A minimum wage underpayment, an unpaid overtime claim or a live grievance becomes yours at completion — which is why the tribunal decisions search and the wage records matter before you sign. On a share purchase the employer does not change, so TUPE generally does not bite; our guide to how to sell a business in the UK sets out the share-versus-asset distinction.

Two deadlines sit inside the process. The seller must give the buyer employee liability information at least 28 days before the transfer date, and a tribunal can award the buyer at least £500 for each employee about whom the seller gave no or incorrect information. Separately, both old and new employers must by law inform a recognised trade union or employee representatives, and may need to consult; a tribunal can award up to 13 weeks' uncapped gross pay for each affected employee where they do not, and the two employers may be jointly or individually liable. Build that timetable into the deal rather than discovering it a week before completion.

Note the contrast if you have read Australian guidance: there, a new employer that is not an associated entity of the old one can treat several accrued entitlements differently. TUPE gives no such discretion, and there is no UK concept of long service leave to price in.

The lease, the licences and the consents

• The lease. In England and Wales, Part 2 of the Landlord and Tenant Act 1954 gives most business tenants the right to renew when the tenancy would otherwise end — unless, before the lease was granted, the tenant agreed with the landlord that the right would not apply. Whether the lease you are taking on is "contracted out" of that right can decide whether the business has a future at the address. Find out before you agree a price, and have a solicitor read the assignment provisions and the landlord's consent conditions. The Law Commission published a second consultation paper on 16 June 2026, which closes on 16 September 2026; a final report is to follow, so nothing has changed in law yet — check the position if you are reading this some time after publication.
• Licences. Use the GOV.UK licence finder to work out what your activity and location actually require, rather than assuming the seller's set is complete. There is no single UK equivalent of the 12-month transfer warning some overseas guidance gives, but nor do licences follow the business automatically.
• Alcohol and entertainment (England and Wales). A premises licence does not pass with the business. Under the Licensing Act 2003 the incoming holder applies to the licensing authority for a transfer, normally with the current holder's consent, and the police have 14 days from notification to object. Scotland licenses premises separately under the Licensing (Scotland) Act 2005, and Northern Ireland under the Licensing (Northern Ireland) Order 1996 — different applications, different timescales.
• Food. A food business must be registered with the local authority at least 28 days before trading.
• Key contracts. Read the change-of-control and assignment clauses in the significant customer and supplier agreements. A contract that terminates on a change of ownership is part of the price.

VAT, stamp duty and structure

An asset sale can escape VAT as a transfer of a business as a going concern, but only if every condition is met: the assets must be sold as part of the transfer, the buyer must intend to use them in carrying on the same kind of business, where the seller is a taxable person the buyer must already be or become one as a result, any part-business sold must be capable of operating separately, and there must be no series of immediately consecutive transfers. Extra conditions apply where opted-to-tax land or buildings are included. HMRC is explicit that the rules are compulsory — you cannot opt out — so the treatment needs settling in the contract, not after it.

There is a related trap. If you take over the seller's VAT registration number using form VAT68, you become "liable for any outstanding VAT from the seller's registration", and the seller loses entitlement to repayments and unclaimed input tax. Taking the number is sometimes convenient; do it only after your accountant has looked at the seller's VAT history.

On a share purchase, the buyer normally pays Stamp Duty of 0.5% of the consideration, rounded up to the nearest £5, and it applies where the transaction is over £1,000. Stamp Duty Land Tax arises only if the deal includes an interest in land or property: for non-residential freeholds the rate is nil up to £150,000, 2% on the portion from £150,001 to £250,000 and 5% above that, with a separate charge on the net present value of rent for a new lease — nil to £150,000, 1% up to £5,000,000 and 2% above. Scotland charges Land and Buildings Transaction Tax and Wales charges Land Transaction Tax instead. There is no UK transfer tax on goodwill, intellectual property or debtor book: since the Finance Act 2003 stamp duty has been chargeable only on instruments relating to stock or marketable securities, and SDLT reaches only interests in land. So unlike buyers in Australian states you are not looking for a carve-out.

If it is a franchise

UK franchising is not a special legal regime. There are no franchise-specific laws in the United Kingdom and no pre-contract disclosure requirement; franchises are governed by ordinary contract law. The British Franchise Association's Code of Ethics is voluntary and binds its members only. So if you have read that a franchisor must hand over a disclosure document a fortnight before signing, or that you get a cooling-off period afterwards, that is Australian law, not British. The franchise agreement is the whole of your protection, which is an argument for giving it to a solicitor and for taking the time the franchisor has not been required to give you.

The customer data you are buying

If a customer list or CRM comes with the business, UK GDPR applies to it. The ICO's data sharing code treats a merger or acquisition as something to examine in due diligence: establish the purposes the data was originally obtained for, your lawful basis for holding and sharing it, and whether either has changed — and decide when and how you will tell the individuals concerned. During due diligence itself, ask for personal data only where the question genuinely needs it, and expect employee and customer records to arrive redacted.

There is no compulsory vendor statement

Buyers arriving from other markets sometimes ask which prescribed disclosure form the seller owes them below a certain price. The UK has none. Protection is contractual: the seller's warranties in the purchase agreement, and the disclosure letter in which the seller lists the exceptions to them. That is a good reason to resolve open questions before exchange rather than relying on a claim afterwards.

What due diligence cannot tell you

Records show what has happened, not what happens next. They will not tell you whether the largest customer stays once the founder leaves, or whether the seller's own reputation was the product. Talk to customers and, where the sale is not confidential, to staff. Then price what you found: every unresolved item is either a reduction in price, a condition in the contract, a warranty from the seller, or a reason to walk away. None of this is legal, tax or financial advice — the aim is to reach your solicitor's and accountant's offices with the right questions and the documents already in hand. Our other UK guides cover the rest of the process, and businesses currently listed show the level of disclosure to expect.

Sources

Every load-bearing claim in this guide, and where it comes from:

• Companies House provides free of charge: "company information, for example registered address and date of incorporation", "current and resigned officers", "document images", "mortgage charge data", "previous company names" and "insolvency information". — GOV.UK / Companies House
• Companies House: "we do not have the statutory power or capability to verify the accuracy of the information that companies send to us"; and "The fact that the information has been placed on the public record should not be taken to indicate that Companies House has verified or validated it in any way." — Companies House
• "From 18 November 2025, identity verification becomes a legal requirement" for directors and people with significant control; that date "marks the start of a 12-month transition period, giving your company time to make sure all directors and people with significant control (PSCs) have verified their identity by their due dates", so the transition does not close until 18 November 2026. — GOV.UK / Companies House (Changes to UK company law)
• Charges must be delivered to Companies House for registration within 21 days: "If a charge is not registered within 21 days, it may be difficult to recover the debt if the company becomes insolvent" and "If you do not send us this information in time, you'll need a court order to register the charge." Charge details are shown on the company's public record. — GOV.UK / Companies House
• The register of disqualified company directors shows "their name, why they were disqualified, when the disqualification began, how many disqualifications they've had", and covers disqualifications by "the courts, the Insolvency Service, the Competition and Markets Authority, the Foreign, Commonwealth and Development Office (FCDO), HM Treasury". — GOV.UK / Companies House
• The Individual Insolvency Register covers bankruptcies, debt relief orders and individual voluntary arrangements in England and Wales, and "Records are usually removed within 3 months of an insolvency case ending". — GOV.UK / Insolvency Service
• Scotland's equivalent record is the Register of Insolvencies, a public register of bankruptcies, protected trust deeds and other insolvencies kept by the Accountant in Bankruptcy. The AiB page is titled "Register of Insolvencies: Public Online Information on Scotland's Insolvent Individuals and Businesses" and covers individuals who are bankrupt or have a trust deed as well as companies in receivership or liquidation. — Accountant in Bankruptcy (Scotland)
• Bankruptcy, debt relief order and individual voluntary arrangement records for Northern Ireland are held by the Insolvency Service, "a division within the Department's Infrastructure and Regulation group", which publishes an Individual Voluntary Arrangement Register and a DRO and BRO register search. — Department for the Economy (Insolvency Service Northern Ireland)
• HMRC's service lets you check "if a UK VAT registration number is valid" and obtain "the name and address of the business the number is registered to"; "You cannot use this service to check if a business or organisation is registered for VAT by searching its name." — GOV.UK / HMRC
• "Find decisions on employment tribunal cases in England, Wales and Scotland from February 2017 onwards", searchable by jurisdiction code including unfair dismissal, discrimination, national minimum wage and redundancy. — GOV.UK
• Northern Ireland is outside the GOV.UK employment tribunal decisions service. The Office of the Industrial Tribunals and the Fair Employment Tribunal runs its own decision search, covering both tribunals and searchable by claimant, respondent, case ID, judge, year and type of claim; decisions are available on the website "from the beginning of 2007", with earlier ones viewable only in the Register of Decisions at the Office of the Tribunals. — Office of the Industrial Tribunals and the Fair Employment Tribunal (Northern Ireland)
• HM Land Registry Information Services fees, form OC1 (official copy of a register or title plan): "By post: £11 per copy" and "By portal or Business Gateway: £7 each per copy". It is the same official copy; the fee varies by application route. Fees are set by the Land Registration Fee Order 2024, which came into effect on 9 December 2024. — GOV.UK / HM Land Registry
• The free property summary gives the address, property description, tenure and whether restrictive covenants or easements exist — it does not name the owner, the price paid or any charge; for those you must buy the title register. — GOV.UK / HM Land Registry
• A limited liability partnership is incorporated at Companies House ("We'll send you a certificate of incorporation when your LLP has been registered") and its designated members must "prepare, sign and send annual accounts to Companies House" and send a confirmation statement, so an LLP does have a public Companies House record. — GOV.UK / Companies House
• A limited partnership must be registered with Companies House under the Limited Partnerships Act 1907 (form LP5, or LP5(s) in Scotland), and comes into existence on registration — so unlike an ordinary partnership it appears on the Companies House register. — GOV.UK / Companies House
• "small companies do not have to deliver a copy of the directors' report or the profit and loss account to Companies House"; micro-entities have the same exemption; and "From 1 April 2028, new legislation means companies will no longer be able to file abridged accounts", with small companies and micro-entities then required to deliver a profit and loss account. — GOV.UK / Companies House
• "You must keep records for 6 years from the end of the last company financial year they relate to", and longer if "they show a transaction that covers more than one of the company's accounting periods", the company bought something it expects to last more than 6 years, the Company Tax Return was sent late, or HMRC has started a compliance check. — GOV.UK
• Companies Act 2006 s388(4): accounting records must be preserved "for three years from the date on which they are made" in the case of a private company, and "for six years from the date on which they are made" in the case of a public company — a shorter company-law minimum than the six-year tax-records requirement. — legislation.gov.uk
• PAYE records: "you need to keep them for 3 years from the end of the tax year they relate to". — GOV.UK / HMRC
• From 1 April 2021, national minimum wage "records must be retained by the employer for a minimum of 6 years beginning with the day the pay reference period following the one that the records cover ends" (previously three years). — GOV.UK / HMRC National Minimum Wage Manual
• TUPE 2006 regulation 4(2): "all the transferor's rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee". — legislation.gov.uk
• Under TUPE, "their employment terms and conditions transfer" and "continuity of employment is maintained". — GOV.UK
• Employee liability information must be given by the old employer to the new employer "at least 28 days before the transfer date", and if it is not, the new employer could receive compensation of "at least £500 for each employee the old employer gave incorrect or no information for". — Acas
• "Before a TUPE transfer, by law both the old and new employers must inform a recognised trade union or employee representatives"; a tribunal may award "up to 13 weeks' uncapped gross pay for each affected employee" for failure to inform or consult, and "If the old or new employer fails to inform or consult, they might be jointly or individually liable". — Acas
• "Part 2 of the Landlord and Tenant Act 1954 gives business tenants the right to renew their tenancies when they would otherwise come to an end", and "Most business tenants automatically have the right to renew under the Act unless, before any lease is granted, they agree with their landlord that the right to renew should not apply." The Law Commission (England and Wales) published its second consultation paper, "Business Tenancies: the right to renew – modernising security of tenure", on 16 June 2026; it closes on 16 September 2026, with a final report of conclusions and recommendations to follow, so nothing has changed in law yet. — Law Commission of England and Wales
• Licensing Act 2003 sections 42–43: a person may apply to the relevant licensing authority for transfer of a premises licence; an application for immediate effect "may be made only with the consent of the holder of the premises licence"; and "The chief officer of police must give that notice within the period of 14 days beginning with the day on which he is notified of the application." The Act extends to England and Wales only. — legislation.gov.uk
• Scotland licenses the sale of alcohol under a separate statute, the Licensing (Scotland) Act 2005, administered by Licensing Boards. — legislation.gov.uk
• Northern Ireland licenses the sale of intoxicating liquor under the Licensing (Northern Ireland) Order 1996, with licences granted by the courts. — legislation.gov.uk
• Food business registration: "You are required to register at least 28 days before trading." — GOV.UK
• The GOV.UK licence finder covers licences, permits and certifications needed for business activities, filterable by nation and activity type. — GOV.UK
• HMRC VAT Notice 700/9: "For there to be a TOGC for VAT purposes, all of the following must apply" — the assets sold as part of the TOGC; the buyer intending to use them in the same kind of business; where the seller is a taxable person the buyer must be or become one; any part-business sold must be capable of operating separately; and no series of immediately consecutive transfers. Additional option-to-tax conditions apply to land and buildings, and "The TOGC rules are compulsory. You cannot choose to 'opt out'." On transferring the seller's VAT registration number (form VAT68), "The buyer's liable for any outstanding VAT from the seller's registration including VAT on stocks and assets kept by the seller." — GOV.UK / HMRC
• Stamp Duty on a share transfer by stock transfer form: "You pay 0.5% duty, which will be rounded up to the nearest £5", and duty applies where "the transaction is over £1,000". — GOV.UK / HMRC
• SDLT non-residential freehold rates: "Up to £150,000" nil; "The next £100,000 (the portion from £150,001 to £250,000)" 2%; "The remaining amount (the portion above £250,000)" 5%. Net present value of rent on a new non-residential lease: "£0 to £150,000" nil; "The portion from £150,001 to £5,000,000" 1%; "The portion above £5,000,000" 2%. — GOV.UK / HMRC
• SDLT does not apply in Scotland (Land and Buildings Transaction Tax) or Wales (Land Transaction Tax for sales completed on or after 1 April 2018). — GOV.UK / HMRC
• Finance Act 2003 s125: "Stamp duty is chargeable under Schedule 13 of the Finance Act 1999 (c. 16) only on instruments relating to stock or marketable securities" — so no stamp duty arises on a transfer of goodwill, intellectual property or a debtor book. — legislation.gov.uk
• Bills of Sale Act 1878 and Bills of Sale Act (1878) Amendment Act 1882: security granted by an individual over goods must be registered as a bill of sale at the High Court. — legislation.gov.uk
• British Franchise Association guidance states that the franchising industry is not regulated, that what is loosely called franchising law is made up of contract, corporate, property, intellectual property and competition law plus court judgments, and that the Code of Ethics is not a binding source of law — a franchisor who ignores it breaches no law. (The page frames the position for Scotland; there is no franchise-specific statute anywhere in the UK.) — British Franchise Association
• British Franchise Association standards: "All members must go through the BFA's accreditation process in order to meet our standards, ensure they are ethical and fall in line with the Code of Ethics for Franchising" — the Code binds accredited members, not the wider market. — British Franchise Association
• "There are no franchise-specific laws in the United Kingdom. Instead franchises are subject to the general principles of contract law, much like other types of businesses"; "There are no pre-disclosure requirements in the UK". — Miller Canfield country guide, published June 2011 — a secondary, non-official source now fifteen years old, cited only for the absence of a statutory franchise regime and of any pre-contract disclosure duty; see the two British Franchise Association entries above for current corroboration
• ICO data sharing code of practice: where a merger or acquisition means transferring data to a different or additional controller, "you must consider data sharing as part of the due diligence you carry out", including establishing the purposes for which the data was originally obtained and your lawful basis for sharing it and whether these have changed, and considering when and how you will inform individuals about what is happening to their data. — Information Commissioner's Office

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