Goodwill in care home

[rhooda001]

Looking at incorporating a partnership that runs three nursing/residential care homes into a limited company. Rather than transferring all the assets, the property asset will remain within the partnership (currently mortgaged) but the proposal is to transfer the 'trade' and remaining assets. The idea is to have a goodwill value that will create a disposal qualifying for entrepreneur's relief and a subsequent loan account in the company.

Given HMRC's stance on goodwill attributed to businesses where the trade is carried out from the property (e.g pubs, hotels, care homes etc), in your view is there an argument in the above scenario that the goodwill disposed of would represent 'free goodwill'?

Look forward to your views.

Many thanks

[mullet]

What sort of goodwill is it? Is it "attached" to the good name of the business or the property itself? If the latter, then how could it be transferred to a limited company except with the property?

[rhooda001]

That is exactly the contention - that goodwill can exist without the property asset attached. Is there an argument for it? HMRC would contend not however I am seeking the opinion or experience of others who may have been able to put forth arguments that 'free goodwill' exists in such property linked trades.

One argument that I could use is that the value of the property assets which have a trading business run from them is greater than the property assets without a business - the property assets still have a value albeit less than that when the trade is conducted from them. This can be evidenced from the surveyors valuation we have.

Mullet - what do you think?