How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15916
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

My father died last year leaving behind a small accountancy and tax practice with annual i

Resolved Question:

My father died last year leaving behind a small accountancy and tax practice with annual income in the region of £20 – 25K that he operated as a sole practitioner.
A local practice took on the clients as part of my fathers contingency plans (just clients, no other assets/business name etc) and have subsequently paid his estate a £1 per £1 of fee income for those clients retained 12 months after my father’s death, this being significantly less than his annual fee income.
Is the base cost for any Estate CGT calculation the annualised fee income at death & therefore there is no capital gain?
.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Let me take a look at this and I'll get back to you.
Expert:  TonyTax replied 1 year ago.
Hi.
I'm assuming that your father had an agreement with the other practice that payment would be deferred for a year.
Normally, as you will see if you click on some of the links which came up in a Google search below, the goodwill of an accountancy practice (the client value) is usually a multiple of the gross recurring annual fees. That will certainly be more than £1 per client, though the multiple can vary depending on the quality of the client base. The google search is here:
https://www.google.co.uk/?gws_rd=ssl#q=accountancy+practice+goodwill+value
The goodwill of your late father's practice should be valued as at the time of his death and based on what has been paid for the client base, there surely cannot be a capital gain.
I hope this helps but let me know if you have any further questions.
TonyTax and other Tax Specialists are ready to help you

Related Tax Questions