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Where Taxpayers and Advisers Meet

Goodwill

Tushar Shah
Posts: 25
Joined: Tue Nov 08, 2016 1:08 pm

Goodwill

Postby Tushar Shah » Thu May 11, 2017 4:46 pm

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?

pawncob
Posts: 4296
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Goodwill

Postby pawncob » Thu May 11, 2017 4:58 pm

What's he paying for? Shares? Goodwill?
With a pinch of salt take what I say, but don't exceed your RDA

Tushar Shah
Posts: 25
Joined: Tue Nov 08, 2016 1:08 pm

Re: Goodwill

Postby Tushar Shah » Thu May 11, 2017 5:05 pm

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

bd6759
Posts: 3076
Joined: Sat Feb 01, 2014 3:26 pm

Re: Goodwill

Postby bd6759 » Thu May 11, 2017 5:48 pm

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.

Tushar Shah
Posts: 25
Joined: Tue Nov 08, 2016 1:08 pm

Re: Goodwill

Postby Tushar Shah » Thu May 11, 2017 6:42 pm

Sorry but they are holding shares in the LTD

bd6759
Posts: 3076
Joined: Sat Feb 01, 2014 3:26 pm

Re: Goodwill

Postby bd6759 » Thu May 11, 2017 11:09 pm

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.

Tushar Shah
Posts: 25
Joined: Tue Nov 08, 2016 1:08 pm

Re: Goodwill

Postby Tushar Shah » Fri May 26, 2017 11:27 am

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?

pawncob
Posts: 4296
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Goodwill

Postby pawncob » Fri May 26, 2017 12:33 pm

No. He's selling his shares, not Goodwill. The Goodwill is owned by the LTD.
With a pinch of salt take what I say, but don't exceed your RDA

Tushar Shah
Posts: 25
Joined: Tue Nov 08, 2016 1:08 pm

Re: Goodwill

Postby Tushar Shah » Wed May 31, 2017 8:18 pm

Thanks


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