I have a client who is about to incorporate his partnership.
1) He is asking me why create a loan account (and pay tax albeit at 10%) when he and his wife will have quite enough tax-free income from dividends and salary to meet their needs.
So far the only reasons I have thought of are that in the future Entrepreneur Relief could be withdrawn or dividends in family companies could become taxable/NICable as earnings in some way.
Does anyone have any other ideas (or am I missing something important here)?
2) Am I right in thinking that S.162 Incorporation Relief is only possible where the business premises, which are NOT in the partnership balance sheet, are transferred?
3) If the goodwill was worth say £200,000 but was transferred for £50,000 with a S.165 Gift Relief claim being made, would the company accounts show Goodwill £50,000 or Goodwill £200,000, Revaluation Reserve £(150,000)?
All help gratefully received!