MoFin LTD On 10 November 2020, GoMo Ltd purchased 80% (800 shares) of the issued share capital in a new UK company called ‘MoFin Ltd’. GoMo Ltd paid £160,000 for the issued share capital. ‘MoFin” was originally run as a sole-trade by Mr Smith. On 10 November 2020, Mr Smith transferred the business assets in to a newly incorporated company ‘MoFin Ltd’, in return he received £160,000 cash and a 20% shareholding in the company (200 shares). The market value of the net assets Mr Smith transferred to ‘MoFin Ltd’ on incorporation was: Market Value £ Internally generated goodwill 60,000 Freehold office* 127,000 Debtors 25,000 Creditors Total net assests 200,000 *The freehold office was brought March 2011 for £50,000 Mr Smith, (who is 63 and a higher rate taxpayer), remains involved with the business as a part-time director of MoFin Ltd. ) Calculate the capital gains tax Mr Smith will owe to HMRC following the incorporation of ‘MoFin Ltd’ in the tax year 2020/21. Your answer should take into consideration any incorporation and business asset disposal (entrepreneur’s) relief which are available to Mr Smith
.MoFin LTD
On 10 November 2020, GoMo Ltd purchased 80% (800 shares) of the issued share
capital in a new UK company called ‘MoFin Ltd’. GoMo Ltd paid £160,000 for the issued
share capital.
‘MoFin” was originally run as a sole-trade by Mr Smith. On 10 November 2020, Mr Smith
transferred the business assets in to a newly incorporated company ‘MoFin Ltd’, in return
he received £160,000 cash and a 20% shareholding in the company (200 shares).
The market value of the net assets Mr Smith transferred to ‘MoFin Ltd’ on incorporation
was:
Market Value £
Internally generated
Freehold office* 127,000
Debtors 25,000
Creditors
Total net assests 200,000
*The freehold office was brought March 2011 for £50,000
Mr Smith, (who is 63 and a higher rate taxpayer), remains involved with the business as a
part-time director of MoFin Ltd.
) Calculate the
of ‘MoFin Ltd’ in the tax year 2020/21.
Your answer should take into consideration any incorporation and business asset disposal
(entrepreneur’s) relief which are available to Mr Smith
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