The old and the new

We act for a professional limited liability partnership (Old LLP) which is thinking about incorporating its business into a new limited company NewCo.

Our client knows that since December 2014 capital gains tax entrepreneurs’ relief on the sale of goodwill to NewCo has no longer been available and that goodwill amortisation in NewCo is also prohibited. However our question relates to the ownership of NewCo and in particular the desire not to jeopardise any relief that might be available under TCGA 1992 s 162.

If the members of Old LLP become the shareholders of NewCo and transfer all the assets (with the exception of cash) to the new company we anticipate that s 162 should apply automatically.

However what would be the position if instead of their individual ownership of NewCo the members of the legacy partnership formed a...