Can goodwill be sold in 3 years and property today?

Can goodwill be sold in 3 years and property...

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Client wants to sell building (shop downstairts and flat upstairs) but will continue trading from shop for another 3 years until the business passes to the new landlord. Client wants the completion statement to state that he is selling the property (with immediate effect) plus goodwill (with effect in 3 years' time). Does this represent acceptable practice for BA taper relief and is is valid legally? Any ideas/ suggestions welcome. Thanks.
james

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By AnonymousUser
05th Apr 2006 10:33

Get the legals clarified...
The client should be told that a completion statement verifies prices paid for property, etc. and confirms that a written or implied earlier contract is fulfilled. It should not purport to "complete" on an asset whose ownership is not passing. One hesitates to be categoric , given the cloudy background, but what appears to be the client's intention is to sell his freehold property and take a lease-back whilst granting a form of option on the goodwill of his business. Perhaps James could come back if this view is totally wrong. If not, then there should be no bar to BATR on property from which the business is conducted but watch out for the possible application of the part-disposal formula which , if it came into play, would reduce the cost employed in the CGT computation. As to goodwill: you should seek a legal view. Is this another lease-back or an option? The former means a disposal now with BATR available. The latter stops the clock in the sense that the next 3 years are ignored (subject to a de minimis rule-- read TCGA 1992) but if the client has got his 2 years under his belt, who cares? Frankly, I have never encountered this situation in practice and another meeting with the client plus his solicitor may well sort out the problem, to include of course the client's thinking. What exactly are his goals?

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