I've come across a situation where a family member retired from the partnership in 2012/13 but nothing has been reported on the CGT pages of his 2012/13 tax return.
The Partnership Agreement states that there should be no payments for goodwill.
I've looked at Paragrapgh 8 of Statement of Practice D12 which states that market value will not be substituted if nothing would have been paid had the parties been at arm’s length. There are a couple of examples in HMRC's CG manual demonstrating how this works - particularly example 4 but it involves mostly partners who are not otherwise connected: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg27800
I still think my case involving a family partnership falls within Para 8 but would appeciate readers thoughts as the deadline for any holdover claim for 2012/13 is 5 April 2017. I suppose there is an argument that the Partnership Agreement would have been different if drawn up by parties not otherwise connected but suspect this is over analysing the position somewhat.
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I have been around for a long time, and I have yet to see a partnership that did not expressly exclude goodwill payments. I was myself a member of a large national one for several years that did just that. When I did my exams many years ago we were taught how to account for partnership goodwill but at the same time told that it was an old fashioned practice that had almost died out.
johngroganjga do you think Para 8 applies to my family partnership (it buys and sells equipment)?
The point I am making is that partners acting at arm's length never, in my (quite considerable) experience receive or make payments for goodwill when entering or leaving partnerships.
