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.

Comments please.

Comments
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The director would struggle with the claim

Locutus |
Locutus's picture

Wouldn't ...

Old Greying Accountant |
Old Greying Accountant's picture

"Director sues accountant" - comments please

bookmarklee |
bookmarklee's picture

Passage of time a good point

zarathustra |
zarathustra's picture

Use a professional valuar

rampanesar |
rampanesar's picture

Explain the consequences

cathygrimmer |
cathygrimmer's picture

.

ireallyshouldknowthisbut |