Valuing Goodwill

Valuing Goodwill

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When a sole trader incorporates his business, is there a recognised method for valuing the goodwill that can be used if the valuation is challenged by the Inland Revenue?
Lee Inman

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By User deleted
12th May 2006 13:09

I reckon Angus is on to something, here
We all know how good our clients are at estimating their own tax liabilities and how they moan when our detailed calculations are a good deal higher. Clearly it will be much less of a headache for us and our clients if we simply go by their gut instinct.
Hands up who agrees.

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By angus.odonnellandco
12th May 2006 11:52

How long is a piece of string ?
There must be a 1001 ways to value the goodwilll of a business [assets, earnings, local competition, specialist market etc. etc.]
Goodwill is the fair value payable to a willing seller in an arms length transaction by an informed and willing buyer. Having said that, your clients usually have a good idea how much they think their business is worth, and you can usually find a formula which will fit in with the asset value and/or earnings before tax and interest and your client's sense of worth.

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