Hi,
I am a solo practitioner and one of my clients approached me with a request to transfer his sole trade business to a limited company. I have not done this before myself and would need confirmation if my process is correct. I estimated the goodwill of the business to be approx. £25,000 (based on his client list and profit for the last two years). There is very minimum of other assets (approx. £1,500). I will be filling the form CG34 to have HMRC blessing. When applying Business disposal relief the CGT will be approx. £1,420 (this is for the tax year 2020/21). The client's limited company was set up a couple of years ago by himself and I submitted the dormant account for the last year. However, when the client set up the company he issued class A shares & class B shares (10 shares each). The B shares are allocated to the client's wife. My question is if these class B shares make any difference in the transfer or can I process the transfer as detailed above? He is the only director of the company and the transfer will be credited to his DLA.
My second question is about the goodwill in the company. As the goodwill doesn't include any IP therefore it's not tax deductible. Am I correct or did I miss something?
Thank you
