How to value a business asset?

How to value a business asset?

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Hi

An interior design limited company was incorporated since October 2010. It filed dormant company accounts as at the year ended 31 October 2013 with £2 in Cash at Bank and in Hand, and £2 Share Capital. The Ordinary shares are owned equally by Mr & Mrs X. They were also Directors with no salary.

The company started trading in January 2014. On 27/05/2014, the £2 shares were transferred for free to Mr & Mrs X's daughter and son in law (each owning £1 share). The directorship was also transferred to the daughter and son in law on the same date.

1. How to value the asset at the date of transfer?

2. Would holdover relief apply?

Thank you.

Replies (5)

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By chicken farmer
28th Jan 2015 14:45

Cart before the horse

If you are planning to claim hold-over (see s. 165 TCGA) then you don't need to worry about the value (see SP 8/92).

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By User deleted
28th Jan 2015 14:55

You may not have to "worry" about a valuation

But you will still need to consider it - that is a consequence of the way in which the relief works (by deducting from the transferee's base cost the amount of the gain held over - you can't do that if you don't know what the gain is and you don't know what the gain is if you don't have some idea of the value).

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By chicken farmer
28th Jan 2015 15:32

Maybe I should have said;

No need to worry now. But in this case on a further disposal the held over gain will be irrelevant as the daughter & son-in-law will simply inherit the parent's base cost of £2.

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By User deleted
29th Jan 2015 11:51

Where does it say ...

... that the transferees will simply inherit the transferors' base cost?

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By chicken farmer
29th Jan 2015 13:55

Of course ..

S. 165 doesn't say that, but, if you work through the process, that's the effect.

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