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Sale of part of client lsit

Ltd company practice with 5 shareholders and one of them is taking the clients they manage to another practice due to relocation.

Proposed purchase:

      Acquirer buys goodwill (clients) say for £100,000 from practice

      Practice pays corporation tax of £20,000

     Buys back exiting shareholders shares for £80,000

    Shareholder claims ER and after tax receives £73,000ish

Is there a way the exiting shareholder could get £91,000ish by being able to claim ER on the whole £100,000 

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Is the acquirer the firm the exiting shareholder is moving to rather than the exiting shareholder themselves?

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Yes, the acquirer is the firm the shareholder is moving to.

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Yes

Company buys back the shares for £100k.

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What do you mean by "the whole £100,000". You say he is selling the shares for £80,000. Ruddles I think means that if he can renegotiate the price up to £100,000 he will be left with something like £91,000 after CGT. As a matter of arithmetic that is obviously right, but I suspect that is not the insight you were looking for.

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Is the purchase proposal not back to front?  

As it stands the practice is selling the fees on to the new firm and then the shareholder is exiting the practice to join the new firm.  If the shareholder leaves the practice and gives up their shares in return for their client bank are they then not free to sell it on to the new firm for the full £100k.

 

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Grayson

That might work, except ...

Where is company 1 going to get the cash to pay its tax on the disposal to shareholder? Cash-wise, the company is in the same position per my suggestion.

Further, are you happy that disposal of shares would be subject to capital treatment?

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Greener grass
I hope you get to be the boss in the new firm or they have really bright green grass.

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