A partnership client is looking to incorporate. There are intangible assets in the form of goodwill, value unknown. The VAT registration will be transferred but not the tangible assets (approx. £100k TWDV in plant).
My concern is that they want to protect the assets - there is a pending VAT audit.
- Will the goodwill need to be valued for capital gains tax purposes and how? Since there is no tax relief for goodwill then the consideration for the shares may be minimal. Would the consideration be used for CGT or the market value?
- Would entrepreneur's relief be available if not all the assets are transferred?
- Would it still be TOGC for VAT if not all assets are transferred?
- Does the company take on all the VAT liabilities of the sole trade?
- Would HMRC prevent the transfer of the VAT registration until after the audit or ask for some kind of security from the company?
I only do the SA returns so do not know what will come up in the audit but am not happy with the incorporation timing or ring-fencing the assets (and the motivation). Any comments would assist me in my reply.