Goodwill and incorporations
Here is a scenario which has not happened to me (yet!) but I have been thinking about recently.
Very profitable Business incorporates.
Accountant assists client with goodwill valuation, and a substantial directors loan account is created. The valuation utilises a multiple of owners benefit of 2-3 times.
Amortisation is claimed as a deduction in the company P&L.
Some years later the company successfully disposes of the business to a third party for eight times profits. A substantial corporation tax bill results.
The director is unhappy as he has sold the business to the company too cheaply. Overall the company and director have paid more tax than the optimum amount.
Director sues the accountant.
- Halloween - do you celebrate it? 1,395 47
- Enquiry into tax return - how co-operative would you be? 321 7
- Interest on HMRC contract settlement 156 3
- Goodwill gesture for providing work 427 12
- Share premium or Directors Loan 728 30
- VAT reconciliation and VAT return on Sage 102 3
- What would you do in this situation? 128 5
- Filing a P87 (professional fees) before year end. 129 2
- Recommendations for payroll/AE software? 601 13
- More HMRC on gov.uk 629 11
- Rollover relief - when does gain crystallise in this situation? 84 1
- Offshore company transferring assets to a UK individual. 340 14
- Interest Free Loan - Salay Sacrifice? 241 4
- Research and development - repayment timescale 218 5
- Sole trader hid directorships. 384 6
- NOVA 550 1
- Clearing payments on account/ Sage 50 271 10
- Regional Development Grant 120 4
- Problem ex client...again.. 2,402 21
- Company car without a salary 229 2
- Bonus Bonds 390
- Insolvency and whistle blowing 377
- Transfer of funds into recently set up company 288
- TPR imposes first penalty notice fines 257
- Box 8 VAT Return - deposit payment 186
- Husband proposes to buy the car as Director unable to acess finance 177
- Finance Lease 155
- Company Car Lease 152
- Form 42 147
- Demerger Reserve 130