Goodwill Valuation

Sion

Does anyone have any guidance on goodwill valuation.

A business has gone from being a partnership to being a Limited Company and therefore i believe there may be goodwill involved. Mainly because the partnership had built up the customer base and sold it to the limited company. How would i value the goodwill?

Many thanks

reader

Sion wrote: »

Does anyone have any guidance on goodwill valuation.

A business has gone from being a partnership to being a Limited Company and therefore i believe there may be goodwill involved. Mainly because the partnership had built up the customer base and sold it to the limited company. How would i value the goodwill?

Many thanks

Discuss it with the client.

Try a multiple of the profit as a starting point, e.g. 1.5 or 2 times last year's profits.

Complete Form CG34 if you are worried about HMRC challenging your valuation.

Sion

Many thanks for your help

jamesm96

If it's a customer base that's been sold then I might be inclined to consider treating it as a sale of a block of clients (or customer contracts or whatever you want to call it) rather than a transfer of the whole business including goodwill; if there is scope to capitalise some other form of intangible asset rather than goodwill then you'll probably have less of an issue with HMRC.