Hi and thanks for taking a look at my question.
I own a LTD IFA firm, (LTD). I joined a new financial firm(CF) as a sole trader and they offered to buy any clients I could get under my new sole trader firm after 1 yr.
I invited clients from my LTD company firm, to join me, along with their spouses, family and friends etc.
I estimate 50% of those clients accepted a direct marketing offer to join me in my new sole trader firm with CF.
When the time comes to sell those clients to the new financial firm, CF, they will pay me 8% of their total value, approx 3 million.
But the new contract is with me as a sole trader. My LTD IFA firms clients are free to come and go as they please and can choose any adviser they want.
If my LTD company, wanted to sell those clients as a going concern, in which case they would be classed as goodwill, I would need to novate them from my ltd firm, to the new buying firm,CF, or any new firm who wanted to buy them, but this never happened. The clients that joined me in my new venture, did so under their own steam.
Once the clients are sold, the sole trader firm will close. As I understand it, selling a sole trader practice after 2 years can get some relief for some of the money to 10% CGT. This won’t affect me, so the rate I would pay would be 20% CGT.
So the question is, and I have had a few opinions, after 1 yr as self employed agent of CF and selling the clients to the new company, CF, will this be classed as cgt tax? Or can HMRC deem the clients to be goodwill assets from my LTD firm?
*This question has been edited with additional amends.*