Goodwill Valuation

Been a while since I did one of these; have a client running a partnership (married couple) who have incorporated.

I know HMRC will want to reduce the profit (for valuation purposes) by a notional amount to represent the salary of a manager which would be required if anyone were to buy the business; presumably they're also happy to remove the cost of any salary payments made to the existing owners on the same basis?

Cheers all,

Mike.

Comments

  • jamesm96
    jamesm96 Registered Posts: 523
    Anyone? :001_unsure:
  • MarkT
    MarkT Registered Posts: 302
    I'm still only a level 3 student and having gone over this subject recently, I don't remember being given an indication as to how goodwill is valued.

    I'd have thought that is has the same value as say, a used car, ie, its as valuable as someone is willing to pay for it. After all, it is an intangible asset and has no real meaning apart from as I said, what the potential buyer and partners agree to
  • groundy
    groundy Registered Posts: 495
    I'd say Goodwill is about £20k
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    groundy wrote: »
    I'd say Goodwill is about £20k

    Absolutely!
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    jamesm96 wrote: »
    presumably they're also happy to remove the cost of any salary payments made to the existing owners on the same basis?

    What cost? That's just an appropriation of profit, right?
  • jamesm96
    jamesm96 Registered Posts: 523
    What cost? That's just an appropriation of profit, right?

    Maybe I should just PM you before I post stupid comments on an open forum! Lol.

    You're quite right, of course, I was referring to 'Wife's Wages' which the accounts would have been showing had the business been a sole trader, forgetting that they were (as I'd even put in my opening post) a partnership!
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