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Hi,

3 Partners have started Restaurant business without paying any goodwill in June 2015 with 300 ( 100 each ) share capital £1 value of each share. In March 2017 one of the partner would like to retire and transferring his shares to remaining two partners. Remaining partner agreed to pay £120k to leaving partner.

- How to account above transaction
- What is value of goodwill?
- Will leaving partner liable to pay any tax

If above £120 consider as a

Consideration for stock transfer that mean value of 100 shares £120k so in this case how to value 200shares hold by other partners and do company need to pay SDLT?

If above £120 consider as a

Consideration for Goodwill than what is total value of company goodwill?

What's he paying for? Shares? Goodwill?

They are paying based on value of the business and also very same time getting 100 shares from him.

You seem to be confusing a partnership with a company.

If a shareholder sells his shares, there are no accounting entries for the company. The shareholder simply records the sale in his tax return as a capital gain of £119.900.

Sorry but they are holding shares in the LTD

Then he sells his shares to his fellow shareholders for whatever amount they agree. That is a personal transaction and has nothing to do with the company accounts.

Thanks for your reply.

3 partner started limited and now 1 partner selling or transferring share to other two with consideration so my understanding that value two other shareholders paying based on total value of company / Goodwill / total number shares x share hold by seller. I think goodwill would be consideration received from selling shareholder x 3 ( as he is selling 33.33% of his share ). Am I right?

No. He's selling his shares, not Goodwill. The Goodwill is owned by the LTD.

Thanks