Goodwill
My client is in his late 60s and owns all of the shares of Y Ltd a general accountancy practice. Y Ltd will be selling all its assets and goodwill to another unconnected practice Z Ltd.
The agreement is that the liabilities and potential liabilities will remain with Y Ltd. The ICAEW recommends six years of run-off cover for professional indemnity insurance (PII). After the sale Mr X will liquidate Y Ltd as soon as possible but within three years of sale to qualify for business asset disposal relief. The likely PII premiums for run-off cover are high.
Mr X had traded as a sole practitioner until 2011 when the practice was incorporated. How can a deduction be obtained by Y Ltd for the premiums after the sale to Z Ltd when it will no longer have trading income for say ...
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