Asset sale or share sale: which way should a pharmacy be sold?

rajkamalbhatti

Sep 25

6 min read

Updated: Oct 1

There is no single right answer: the route is chosen for tax and for what the buyer is willing to inherit, not for convenience. An asset sale moves the business out of the seller's company and leaves the company behind. A share sale moves the company itself, with the business, the history and the liabilities still inside it. That difference decides whether the buyer must be on the pharmaceutical list before it can provide NHS services, what it inherits, and how the tax falls - and it is settled at heads of terms, months before a solicitor drafts a word.

What is the difference between an asset sale and a share sale?

In an asset sale the buyer buys what the business is made of: goodwill, fittings, the lease, the equipment, the stock, and the patient medication record data, which carries its own data protection obligations. In a share sale the buyer buys the company, and everything it owns and owes comes with it.

The pivot is the legal identity of the contractor: an asset sale puts a new legal person behind the counter on Monday morning, a share sale leaves the same one under new ownership. The choice exists only where a company already owns the pharmacy. A sole trader or a partnership has no shares to sell.

Does the NHS contract move in a share sale?

No, because it does not have to. The company on the pharmaceutical list before completion is the company on it afterwards, so there is no application under regulation 26 of the National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013: it is engaged only where one person proposes to carry on the business in place of another, and in a share sale nobody does.

The NHS still has an interest. Schedule 4, paragraph 32 requires a body corporate contractor to give notice to NHS England within 30 days, or as soon as practicable afterwards if that is impracticable, of any change to the names of its directors or the name or address of its superintendent, and, within 30 days of appointing a director or superintendent who was not named on the original list application, to supply the information in paragraphs 3 and 4 of Schedule 2 about that person. That happens after completion, not before it.

What does the NHS require before completion in an asset sale?

The buyer applies under regulation 26, and in practice the grant comes first: until the application is granted and the buyer is entered on the pharmaceutical list, it cannot provide NHS pharmaceutical services from those premises. The Regulations do not themselves make completion wait for the grant - that conditionality is written into the sale contract.

Regulation 26 disapplies section 129(2A) of the National Health Service Act 2006, so a change of ownership at a community pharmacy is not tested against the pharmaceutical needs assessment: the buyer cannot be refused because the area no longer needs a pharmacy. Distance selling premises are the exception. Regulation 26(3) requires NHS England to refuse a change of ownership application relating to distance selling premises unless it would survive regulation 25(2), so the incoming owner still has to show the premises are not on the same site or in the same building as those of a provider of primary medical services with a patient list, and that its procedures will secure the uninterrupted provision of essential services, during opening hours, to persons anywhere in England without face to face contact at the premises.

And nothing is assigned. Under regulation 75 the seller's listing for those premises is removed, and the buyer goes on the list under Schedule 2, paragraph 34 once a valid notice of commencement has been given. The full sequence is in what happens to the NHS contract when a pharmacy changes hands.

A change of ownership at the same premises is not notifiable, so Schedule 2, paragraph 27 gives 30 days from receipt of a complete application; one that also relocates the pharmacy is notifiable, and the period is four months. The notice of commencement must then be given at least 30 days before services start, unless a shorter period is agreed. That is two months of statutory clock before anything goes wrong, which is why three months is an honest estimate and a fortnight is not. The Regulations say NHS England, but the body you deal with is your integrated care board.

What does a buyer inherit when it buys the shares?

Everything the company has ever done. Contracts, leases and guarantees, PAYE and VAT history, corporation tax, past NHS claims and any adjustment attached to them, controlled drugs record keeping, employment claims, and whatever nobody has found yet.

That inheritance is why a share sale usually carries a wider warranty schedule and a separate tax covenant for pre-completion tax. A fact properly disclosed against those warranties is usually a fact the buyer cannot then claim on, though how much protection that gives depends on the disclosure standard the contract sets.

The buyer also inherits the NHS money for dispensing already done, which arrives well after the month it relates to: it belongs to the buyer unless the price says otherwise, while on an asset sale it stays the seller's and the cut-off has to be written down - the discipline we set out in how to sell a pharmacy.

Since 18 November 2025 identity verification at Companies House has been a legal requirement: a new director needs a verified identity before the appointment can be filed, and a person with significant control registered after that date has 14 days to confirm verification. Put it in the completion timetable.

Does TUPE apply either way?

Of the two routes, only an asset sale is a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006. The employer changes; on a share sale it does not.

In an asset sale:

Contracts transfer, with continuity of service and most liabilities attached (regulation 4).
Employee liability information must go to the buyer not less than 28 days before the transfer (regulation 11). It was 14 days until 2014.
Inform and consult "long enough before" the transfer (regulation 13). TUPE sets no minimum number of days; the 30-day and 45-day figures come from collective redundancy law under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992, not from TUPE.
Small employers get a shortcut. For transfers on or after 1 July 2024, where there are no appropriate representatives already in place and the employer has not invited an election, an employer with fewer than 50 employees, or a transfer of fewer than 10 employees, may inform and consult the affected staff directly (regulation 13A).
Harmonisation is the standard trap. Regulation 4(4) voids a variation whose sole or principal reason is the transfer, even where the employee agrees to it.

None of that runs on a share sale, though key employment contracts may still carry change of control clauses.

What happens to the lease and the premises registration?

An asset sale needs the lease assigned or a new lease granted, which puts the landlord on the critical path. A share sale usually does not, unless the lease has a change of control clause, which turns it back into a consent transaction. Where consent is not to be unreasonably withheld, section 1 of the Landlord and Tenant Act 1988 makes the landlord decide within a reasonable time, give reasons in writing, and carry the burden of proving reasonableness. There is no statutory 28-day clock.

The General Pharmaceutical Council registration does not transfer on an asset sale either: under section 74H of the Medicines Act 1968 the premises entry ceases to be valid unless the incoming owner notifies the registrar in writing within 28 days beginning with the date the change occurred, or three months where the change follows a death. A share sale leaves the person carrying on the retail pharmacy business unchanged, so the entry stands; a change of superintendent pharmacist is notified separately under section 71.

Who decides this: the accountant or the solicitor?

The accountant decides which structure works for tax; the solicitor delivers it and prices the risk. Take both views before you agree a price.

Ask your accountant, in writing, how the proceeds are taxed on each route, which reliefs apply at the date you expect to complete, and what stamp taxes fall on whom. Do not take those answers from a website, including this one - rates, reliefs and thresholds change. Ask your solicitor how wide the warranty package will be and who is running the regulation 26 application.

Buyers should read this next to how to buy a pharmacy in England; choosing between the two routes is what we do.

This is general information and not legal, tax or financial advice; your solicitor and accountant confirm the legal and tax points for your own sale or purchase. If you are weighing up the two routes on a real pharmacy, tell us where you are.

Rajkamal Singh Bhatti MPharm is a practising pharmacist (GPhC registration 2230365) and a former Superintendent Pharmacist of a national group of 120 branches, which he took through insolvency and sale. He founded RSB Consulting.