On a S162 incorporation where the purchasing company already trades and has a number of shareholders, obviously the number of shares issued to the vendor will depend on the value of the unincorporated business being introduced to the company.
If goodwill (relating to the unincorporated business) is valued pre incorporation and then when the post-transaction valuation check is applied for, it becomes necessary to agree a diffeent figure with HMRC, how, in practical terms does the company go about varying the number of shares issued to the vendor accordingly?
Any thoughts or ideas would be gratefully received.
Replies (2)
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I think you are saying that the value of the shares received are greater than the value of relief avaiable under s162.
In that case the excess is surely just taxable as consideration for the disposal of the goodwill?
Rather unusual because if there are other shareholders (I assume not connected) then this should establish the correct MV.