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Lack of joined-up thinking means inconsistent treatment of the sale of goodwill
KEY POINTS
- The government’s policy of attacking unintended advantages.
- Treatment of sale of shares in a subsidiary company.
- Is the disposal subject to capital gains tax or corporation tax?
- Seemingly identical companies will be treated differently according to whether they began business before or after April 2002.
William E Simon the secretary of the US Treasury during the Nixon administration said “The nation should have a tax system that looks like someone designed it on purpose.”
Perhaps the UK government took this on board when it altered entrepreneurs’ relief on incorporation restricting it on the sale of goodwill because it gave an “unintended advantage” to those incorporating a business.
Some have called the action intellectual dishonesty but I prefer to call it revenue raising – after all this unintended advantage...
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