Goodwill on incorporation

A client is transferring their business from an LLP to a Ltd - does Goodwill have to be trasferred?

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A client is transferring their business from an LLP to a limited company. As a matter of fact, the company would have a saleable value (on the open market) in excess of £1m. My question is do we have to recognise and transfer goodwill or can we simply ignore it (and not add it in to the new Ltd's balance sheet). I am aware that the client will miss out on a (large) director's loan account to draw down on but for now I am asking if it is technically "ok" to ignore goodwill.

Many thanks

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By Justin Bryant
03rd Sep 2018 15:09

It's an interesting question as to whether goodwill can be separated from the relevant business. There are conflicting cases I believe and I think HMRC's view is that it cannot be separated (search Google and this site also as it's been discussed here before I think).

NB you do not get s162 relief if the whole business (including goodwill) is not transferred.

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By Portia Nina Levin
03rd Sep 2018 15:19

Yes. You can just ignore all of the assets that have been transferred.

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