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Our clients own the goodwill of an accountancy partnership. They have been approached by a local independent financial advisers (IFA) company to whom referrals have already been made, to formalise the business relationship and give it exclusivity. The IFA company has offered a large capital sum to our clients for their database, and in return our clients will exclusively refer their customers to the IFA.
Our clients own the goodwill of an accountancy partnership. They have been approached by a local independent financial advisers (IFA) company to whom referrals have already been made to formalise the business relationship and give it exclusivity. The IFA company has offered a large capital sum to our clients for their database and in return our clients will exclusively refer their customers to the IFA. Do readers agree that this payment is subject to capital gains tax with the benefit of business asset taper relief given that the clients are effectively disposing of part of their business? If it is a part disposal presumably some of the original base cost of goodwill can be apportioned against the proceeds?
Finally would the position change if the parties were connected?
Query T16 971 — Bond.
Reply by Taxpartner:
Prior to this transaction the...
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