Goodwill Valuation Prior to April 2002, with the intention of selling on due to personal changes
I have a client who was a sole trader running a business from 1998 to 20/01/2014 at which time it was beneficial to incorporate, I have since been told that she is wanting to move away (personal reasons) (which means that she will have to sell up as her business and clients are located where she lives.)
The CG34 has not been sent to HMRC as yet, but the approach i am using to value this is taxable profits and a multiplier of 2.5.
Profits (profits + add backs - capital allowances) for the last three years are:
2011 - 37635
2012 - 43511
2013 - 51726
Average over 3 years is 44290 multiplied by the multiplier of 2.5 equals £110,727 worth of goodwill.
If this figure is agreed capital gains tax after entrepreneurs relief will be £9982.67 (110727-10900 Annual Exemption at 10%)
My concern is that do i really want the goodwill to be this high as I don't believe that my client will get anywhere close to this amount on the sale of the company and she would be paying unnesesary CGT in the event of it.
She will have losses to carry forward but will probably not use them, although having said that she has a number of properties!!!!
As she was running the company prior to April 2002, she can only get the relief on selling the business which isnt a problem providing that she can get a decent amount for it. Obviously if if the sole trader business started trading after April 2002, I would want to get as much as possible so that the client could draw on it from her DLA.
Is there anything that I have overlooked, and if you were in this position would you do anything differently?
Thanks in advance
- Goodwill on incorporation low level valuations 204 3
- Transfering bank balnces between old and new co. 329 10
- Best software for small practice? 351 12
- How did you recalculate your payroll fees 1,183 19
- What would you do here, potential insolvency. 1,248 12
- Online accounting provider for multicompany with turnover £10m 155 3
- Anyone having problems with Taxfiler 142 4
- VAT and CT issues on splitting of business 282 6
- HMRC Statements 271 4
- Costly Accounting Software contract 438 2
- Notifying HMRC when striking off company that never traded 239 3
- Company Number 10000000 628 5
- Any update on 2016/17 employer NIC allowance and directors? 218 2
- Car benefit or not? 2,332 21
- Cloud-based email services? 581 11
- NEST web services & Moneysoft 480 6
- Class 1A NIC on motorbike fuel 161 5
- 2012 13 HMRC QUERY 687 10
- Tax Planning for Family and Owner-Managed Companies 2015/16 446 7
- Limited company built a property and the client has made this messy 547 12
- Self employed and HMRC Worldwide Subsistence Rates 757
- Interest paid - do new rules affect Tax Credits? 449
- Directors' advances and credits 304
- Market Invoice (P2P invoice discounting) tax treatment 267
- DTA tie-breaker issue 260
- Tax on internet ad sharing income 241
- Credit against UK NI for NI paid to EEC Countries 219
- CGT for NOn UK residents 211
- Apprenticeship Levy 190
- What are the tax implications of overseas sales through a UK based company? 185