Goodwill Value on Incorporation
When a sole trader converts his or her business to a company, goodwill is often sold out of the old business and becomes an asset of the new company to the benefit of the sole trader. HMRC is taking considerable interest in such transactions and will challenge goodwill values which it believes to be excessive. We have extensive experience in preparing goodwill valuations in these circumstances and a successful track record in negotiating these values with HMRC.
It is desirable that valuation advice is sought early in the process if the optimum value for the goodwill in an unincorporated business is to be achieved. Estimated goodwill values can be included in Business Purchase and Sale Agreements which can then be adjusted later for the final value agreed with HMRC but many clients prefer to be more certain of their potential tax liabilities following such a transaction. In any event, in transactions involving significant goodwill values, challenge by HMRC is highly likely if not inevitable.
How we can help
We can value the relevant goodwill and advise on the negotiating stance with HMRC. We can also conduct such negotiations on our clients’ behalf.
HOW WE HELP
Need to settle a dispute over the value of a shareholding?
How much is your company worth?
Selling a minority shareholding. What is it worth?
Incorporating your sole trader business? What is the goodwill worth and what value will HMRC accept for tax purposes?
Making awards under a Management Incentive Plan? What is the value of the MIP shares for tax purposes?
Negotiations with HMRC at an impasse? Need a new perspective?
GET IN TOUCH
Possibly one of the most neglected and common areas of Pay As You Earn (“PAYE”) failure is where shares are sold by employees or ex-employees – disposals of employment-related shares.
Where not all conditions of the MoU are satisfied – is it possible to put some reliance on the principles of the MoU? If the ‘spirit’ of the MoU is satisfied, can management rely on it?
Following the introduction of the employment-related securities legislation in the Finance Act 2003, there was significant uncertainty in relation to the tax implications for management acquiring shares in venture capital (“VC”) and private equity (“PE”) backed companies.