Kent Solicitors

Sometimes it is better to seek to pay more tax to save tax in the future. The taxpayer wanted to value goodwill on injecting a business into a company at #1,000,000 but HMRC were prepared to agree #500,000.

A larger credit could be made to the Directors loan account at incorporation. Although CGT was payable on this additional #500,000 gain at 10 percent, the #500,000 credited to the loan account could be withdrawn tax free from the company rather than requiring a future dividend which would be taxed at the higher rate applicable to dividends. Tax saved is #75,000

Labels: Disputed share goodwill valuations