Merger - Help

Merger - Help

Didn't find your answer?

Merger -Partnership to existing Ltd Co.

Partnership of 2 Partners who have for some years been the directors/shareholders of a Limited company carrying out the same type of trade but in a different geographical area in the UK.The Partners/directors now wish to put everything under the Limited Company.The 2 Partners will seek a valuation of the Goodwill pay CGT and transfer the value into their respective Loan accounts in the Co.
A complication arises as there is one Director/shareholder of the Limited Company who is not a Partner in the Partnership and she is the wife of one of the Partners/Directors. The other Partner/Director is single. Does this give rise to any tax problems in merging the Partnership into the Limited Co.
Do we treat the Partnership as a cessation for income tax purposes deal with the CGT on Goodwill,credit the respective Loan Accounts and issue shares so that the 'single' Director holds an equivelent holding to the other 2 who are married?
Can any one help with advise on how to resolve this issue?
Thanking you in anticipation.
Paul

Paul

Replies (1)

Please login or register to join the discussion.

avatar
By User deleted
26th Aug 2005 15:06

I think you are going along the correct lines
Your question is a little confusing. is the Limited Company already set up with the shareholders but non trading? If so then the company is merely buying the goodwill as your letter suggests & the amounts should be credited to the relevant directors loan account. In this instance presumably the shares have already been issued between the shareholders. If not then they need to be issued in whatever ratio they wish & paid for accordingly. If this is done before the purchase of the goodwill then it can be at the nominal value - £1?

Yes - you will need to treat the partnership as cessation.

Hope this helps a little.

Thanks (0)