Going abroad

Going abroad

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A partner in a business wants to retire and emigrate. A large goodwill payment is due. If he "sells" whilst abroad this should get round any CGT in the UK. However, the partnership agreement specifies six months notice is due. If he gives notice to retire in six months time would this impinge upon the disposal whilst abroad? Any suggestions?

Kevin Salter

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By User deleted
18th Oct 2002 14:32

Where is he going? When?
There are a number of issues.

1]Will he be subject to tax in the country in which he will be living on the disposal of goodwill.

2] Unless he is going to a country with a suitable DTA with the UK [?Belgium or Singapore for example]he remains vulnerable to CGT if he returns to the UK within 5 years.

3] The Revenue may deny him "split year" treatment under ESC D2 if they see this as an avoidance scheme. That would be no problem if he gave notice today, emigrates before 6thApril and disposes of the Goodwill thereafter.

4]Check whether the disposal of Goodwill legally takes place at the end of the notice period, or if the Parnership agreement could have the effect that the giving of the notice constitutes the date of the disposal !!!

5] Keep in mind that he needs to become not ordinarily resident as well as non resident-that may be more difficult if he were relying on one year's full time non UK "employment" to accelerate the recognition of his status, if he remains a partner in a UK business during that year.

6] He will remain subject to UK income tax in respect of his partnership share earned whilst he is still a partner, even after he has ceased to be resident[that is from 6th April 2003 until the date his notice expires- some homework may be necessary on his overlap relief].

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