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Valuing a physio practice

Valuing a physio practice

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I am having trouble agreeing a valuation with HMIT on the transfer of a physiotheraphy practice to a limited company - does anyone have any advice or experience to offer? The valuation was on the basis of a £ turnover for £ goodwill.
However, shares valuation are saying that it should be closer to 40p in the £ and that the remaining 60p therefore represents a distribution!
If anyone has a client who has sold their physio or osteo practice in the last few years then please can you give me the benefit of your experience.
jonathan Vowles

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By AnonymousUser
25th Mar 2003 08:05

No distribution
Presumably the goodwill was sold to the company for debt. If so, there should be no distribution at the time of sale because the market value of what the seller receives (ie the debt) is nil, because its market value is nil (who would buy it?). The debt should anyway have been structured as a non-assignable personal loan to ensure its market value is nil.

If the Revenue argue there is a distribution when the debt is repaid only repay up to the agreed valuation. The balance can be repaid as a distribution without tax cost as long as the recipient is a basic rate taxpayer because it will still be a qualifying distribution and therefore will carry the normal 10% tax credit. It is only higher rate tax that is at stake from distribution treatment.

Additionally argue that there is no distribution on either occasion because s209(4) is concerned with transfers of assets that are transfers simpliciter. A sale is not such a transfer nor is repayment of debt.

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By Abacjm
24th Mar 2003 17:38

Vowel, Consonant, Consonant, Vowel.
Jonathan,
You haven't given us much to go on here.
When you say the Goodwill was valued on a £for £ of turnover, how many years involved. Was it averaged? Is it an S/P or a partnership that is being incorporated. Thre are many articles on Goodwill and incorporation on this web site to choose from and the essentials will apply to all.
Now herein lies the rub with regard to your particular circumstances, physiotherapy and/or osteopath. The Revenue will be well aware of accepted practice in terms of business valuations, make no bones about that, and that may be where you differ in your valuation.
Do a search for articles on Goodwill and or Incorporation or Business Valuations and you should find something suitable

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By gbms
24th Mar 2003 19:10

Share Valuation Manual
Further to John's reply, with which I agree, have a look also at the Revenue's recently published Share Valuation Manual.

In addition, John Newth wrote a useful article on valuations: Newthwire Issue 13 - Goodwill and Share Valuations

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By jonesd
24th Apr 2013 14:44

Physiotherapy Practice Valuation for Incorporation

A client of mine in a partnership running a physiotherapy practice recently incorporated. We had a formal valuation by a physiotherapy specific broker and valuer and did not have problems at all with HMRC with the valuation given.

I would recommend using them (Morgan cox Physiotherapy Brokers) as they appear to be the only ones selling and valuing these practices on a regular basis.

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