I have a consultancy Ltd company that operates in an uncertain industry, and profit fluctuates. Last year profit £120k, prev year £70k, prev year £30k loss.
The director is in his 60's and wants to retire, and pass the goodwill of the company to his employee for nothing. I'm not sure if that's do-able so they may mutally agree to say £50k. The Net Assets are £200k bank balance. He just wants out and for the employee to continue his legacy.
I'm conscious of Employment Related Securities. Is the 'normal' situation here simply to get the business valued, and shares sold to employee at MV? I've suggested employee sets up a newco, and that company purchases the shares, so at least he'll have a DLA to draw down on. The Net Asset proportion could be structured as a dividend up to newco, then paid out to exiting shareholder. So the employee would need to raise funds for the goodwill element only. Would that work?
Other option is MVL, and employee's newco purchases the goodwill from liquidator at an agreed valuation. This probably seems the cleanest option to me providing exiting guy is conscious of TAAR. Problem is if exiting guy wants to continue as a freelancer or held a non-exec position etc.
I've tried asking for help from my tax advice line, but they're no help. Anyone know the best way of doing this, and if there is any help out there? How would you structure it?