Goodwill:M Smith and another v HMRC [2023] UKFTT 912 (TC) (30 October 2023) is an interesting case on the nature of goodwill. Two individual IFAs operated via a company. The business of the company was transferred to an LLP and the capital accounts of the LLP members were credited with large amounts (over £1m each) with goodwill which was described as ‘goodwill introduced’. HMRC argued that the goodwill must have previously belonged to the company and that there was therefore a distribution by the company when that goodwill was introduced into the LLP. Assessments were raised on each of the LLP members.
On appeal the individuals argued that the goodwill was personal to them as individuals and was never an asset of the company as it had never been recognised as an asset in its balance sheet. On that basis there couldn’t have been a distribution of...
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Goodwill:M Smith and another v HMRC [2023] UKFTT 912 (TC) (30 October 2023) is an interesting case on the nature of goodwill. Two individual IFAs operated via a company. The business of the company was transferred to an LLP and the capital accounts of the LLP members were credited with large amounts (over £1m each) with goodwill which was described as ‘goodwill introduced’. HMRC argued that the goodwill must have previously belonged to the company and that there was therefore a distribution by the company when that goodwill was introduced into the LLP. Assessments were raised on each of the LLP members.
On appeal the individuals argued that the goodwill was personal to them as individuals and was never an asset of the company as it had never been recognised as an asset in its balance sheet. On that basis there couldn’t have been a distribution of...
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