Incorporation of a kind

The three partners in a professional firm are of various ages and have varying base values for their goodwill.

Partly due to the peculiar way in which profits are shared it has not been felt that incorporation would work well for them but they would like to 'bank' their taper relief before 5 April 2008.

Suppose they formed a limited liability partnership (LLP) and transferred the physical assets/liabilities to it. The partners of the LLP will be three limited companies each wholly owned by one of the three partners.

Each partner would then sell his share of the goodwill to his limited company at full value.

The partners would extract their profits out of their limited companies by dividends to the basic rate band after the usual small salary and then draw on the directors' loan account.

Would there be problems with this arrangement?

Query 17 140...