Management fee / Charge
I have an insurance broker client operating with a holding company and one subsidiary. The subsidiary is an FSA registered insurance broker. Books of business are bought and 'hived up' to holding company. Holding company has no separate business but incurs amortisation of its insurance books (purely goodwill). I propose levying a mangement fee to the subsidiary equal to the amortisation suffered on the goodwill on the basis that the subsidiary benefits from the commission and fees earned on the insurance policies. I have been told that the charge in subsidiary's books could be challenged by HMRC on commercial grounds (or other). Can anyone offer any wisdom on this? - I take the view that it would be wrong to not make a charge for the loss suffered by the holding company.
All comments welcome