In recent
years many businesses have incorporated, at
least partly, to take advantage of the zero
per cent rate of corporation tax applying
to the first £10,000 of profits generated
by smaller companies.
The Revenue are now looking
closely at the value of goodwill attaching
to the unincorporated business which was in
many cases ‘sold’ to the new company
for a one-off tax-free windfall. In turn this
has been possible because of the way the capital
gains tax rules operate.
Goodwill is broadly the value
of the business over and above the value of
any physical assets.
The Revenue believe that goodwill
may have been overvalued, with the result
that (additional) tax may now be due, and
have suggested that they will only accept
valuations of goodwill made on a genuine arm’s
length basis.
Internet links:
For a summary of the Revenue’s
views go to:
http://www.shout99.com/
To read the Telegraph article
referred to see:
Telegraph
article
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