Goodwill Valuation

jamesm96

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.

jamesm96

Anyone? :001_unsure:

MarkT

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

I'd say Goodwill is about £20k

deanshepherd

groundy wrote: »

I'd say Goodwill is about £20k

Absolutely!

deanshepherd

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

deanshepherd wrote: »

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!