Commentary

C3.1502 Goodwill in mergers and demergers

Capital gains tax
Capital gains tax | Commentary

C3.1502 Goodwill in mergers and demergers

Capital gains tax | Commentary

C3.1502 Goodwill in mergers and demergers

When professional firms merge it will be necessary to determine what has happened to each firm's goodwill. Most professional firms measure goodwill by their client base, so if the merging firms each transfer most of their client base to the merged entity, there will be an exchange of goodwill between the partners in each of the merged firms1. HMRC state that the goodwill in one of the merged firms will only cease to exist in the exceptional circumstances where none of its client base was transferred into the merged firm. If this is the

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