CGT on Incorporation

[banana1]

I have a sole practitioner solicitor client who is considering incorporation of his practice. Goodwill is not, and never has been, included in the business balance sheet. I reckon that a fair value for goodwill is of the order of £250,000 based on the profits of recent years and am looking for the best way of including the goodwill into the incorporation package preferably leaving the practitioner free to draw funds from the director's loan account. Suggestions would be appreciated. All other assets (excluding cash) will be transferred in exchange for shares in the new company.

[tom 7000]

Why are you transferring all other assets in exchange for shares .

Set up 100 shares pay cash for them

Transfer other assets in at tax wdv...put it on the tx schedule with goodwill...this boosts dla so more to draw out and side step 50% IT rate. Have a paragraph on tx schedule saying transsaction can be rescinded or replaced if quiered and at abs. discretion of transferor/ee. Both sign form.

On the valuatiuon, do a formal one and submit it to the valuation office tn get em to agree...they will probably go with 2-3x annual profits. Because you dont want em coming back in 4 years saying gwill is only 200k and you have a 50k o/d dla....and s419/455 applies etc

Be careful with the property you need a licence or an at will lease not a proper lease or you will throw up stamp duty...lawyer can help with this....

This is relatively straight forward, if you do it with a pub, nightclub, nursing home though, hmrc say theres no goodwill as it is a trade related property and you can create a nightmare...see my post today! 27/11/11 (