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A question of existence

07 September 2006
Issue: 4074 / Categories: Forum & Feedback

I am not sure if I have somehow overlooked a very simple answer to the following question. Mr and Mrs Smith trade, in partnership, as Smith Trading (they are not very imaginative). They have become averse to risk and have considered forming Smith Trading Limited and then transferring the trade into the company; but they are concerned at the impact of capital gains tax on the transfer of goodwill.

I am not sure if I have somehow overlooked a very simple answer to the following question. Mr and Mrs Smith trade in partnership as Smith Trading (they are not very imaginative). They have become averse to risk and have considered forming Smith Trading Limited and then transferring the trade into the company; but they are concerned at the impact of capital gains tax on the transfer of goodwill.
If they instead form Smith Trading Limited Liability Partnership and trade via that limited liability partnership (LLP) is there also a potential capital gains tax charge on the transfer of goodwill from the current non-LLP partnership to the LLP partnership?
Or and as explained in 'Interest or profit' (see Taxation 27 July 2006 page 482) given that the constituent partners are the same and are taxed under self assessment as if the LLP did not...

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