Readers' forum

We notice that some firms of solicitors have replaced their partners with limited company partners; e.g. John Smith replaced by John Smith Limited. Indeed this was referred to in the query 'Whose goodwill?' (Taxation 1 September 2005). That query and the replies focused on the potential capital gains tax implications but we would appreciate some opinions on the general application of this planning.
We assume that the company simply receives the profit share previously paid to the partner. We expect that the tax benefits to this are as follows.
First the tax efficient extraction of profits which are initially subject to corporation tax and perhaps higher rate tax on dividend income when extracted from the company.
Secondly possible further tax mitigation where profits are accumulated over time to create a capital value enabling a gift of shares to a non-working...