Goodwill cash value for medical professional moving from sole trader to limited company

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Ligerry

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Hi all. I am a medical professional who previously worked in the public system and did some private work also as a sole trader.

In the last year I have set up a company and no longer work in the public service. Is there a cash value my company can now pay me for the "value" of my clinical experience, knowledge and reputation that I am bringing to the company?

Is there a tax circular that anyone could share with me that might help me understand this? My accountant has not raised this and I'd like to understand the concept a bit before I discuss with my accountant. Thanks for your help
 
Aren't those cases related to the sale/transfer of businesses whereas that doesn't seem relevant to the original poster's query?
The first case involved the transfer of a business whose value derived from the goodwill attaching to the skill and reputation of the principal surgeon.
...
The second case involves the sale of a cricket stadium and three operations.
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Ligerry said:
Is there a cash value my company can now pay me for the "value" of my clinical experience, knowledge and reputation that I am bringing to the company?
Click to expand...

You mean a wage?

Companies pay wages to their staff, in return for experience and knowledge.

Or do you mean profits?

Companies pay profits to shareholders, in return for investing capital and taking risk.
 
Thanks for the replies much appreciated.

I was previously a sole trader so I thought that the company I set up could provide me with a loan as payment for the skills, knowledge experience etc that clinically I bring to the new company and that I might be able to minimise the capital gains tax payable on this loan as it woukd be considered goodwill. In essence the limited company which has 2 directors only assets are my previous skills and experience and tge goodwill payment from the company woukd be payment for this?
 
Ligerry said:
I was previously a sole trader so I thought that the company I set up could provide me with a loan as payment for the skills, knowledge experience etc that clinically I bring to the new company and that I might be able to minimise the capital gains tax payable on this loan as it woukd be considered goodwill.
Click to expand...
Don't see how a loan could give rise to CGT
Where would the new company get the capital/funds to give you a loan?

I think you need to get specialist advice as you seem a bit confused over how a company operates
 
In the past, the medical profession has pushed the tax rules to their limits and suffered as a result.

Tax Affairs of Consultants​


The IMO received a letter today from the Office of the Revenue Commissioners on the above subject.

It states that the Revenue is reviewing the tax affairs of medical consultants with a particular focus on instances where the consultant transferred his/her business (or part thereof) to a company owned and controlled by him/her.

The Revenue will be writing to consultants and their agents requesting information on areas that have been identified where considerable tax loss is at risk. It goes on to state that that in cases where the reply does not adequately deal with all of the risk area(s), or indeed where the taxpayer fails to respond to the request within the required timeframe, such cases will be escalated to full Revenue audit. Any audit would be conducted under the Code of Practice for Revenue Audit.
 
More than €92.8 million has been collected by Revenue under the medical consultants’ tax compliance programme between 2013 and 2024, the Medical Independent has learned. The figure includes taxes, penalties, interest, and ‘uplift’ charges. Uplift relates to the estimated tax receipts saved or to be collected in future because of interventions, according to a Revenue spokesperson.
 
And please make sure to sue your accountant when it all goes wrong and not Askaboutmoney.


www.independent.ie

Hospital consultants sue accountants after tax defaulter probe

Four prominent hospital consultants who were billed for thousands of euro in unpaid taxes in a Revenue probe of the medical profession are suing the Dublin accountancy and consultancy firm that advised them.
www.independent.ie www.independent.ie

Four prominent hospital consultants who were billed for thousands of euro in unpaid taxes in a Revenue probe of the medical profession are suing the Dublin accountancy and consultancy firm that advised them.
The consultants, who were named on the Revenue Commissioner's tax defaulters list in the past two years, issued the proceedings against Houlihan Cushnahan Consulting Ltd, a firm based in Glasthule.

The accountancy firm is understood to have advised a large number of medical consultants on their tax affairs over the years. The consultants taking the legal actions are among 30 or so prominent medical professionals who were named as tax defaulters since the Revenue began probing a "tax planning strategy" that was being "promoted" within the medical profession.

The tax trawl has generated €54m in unpaid taxes from 253 hospital consultants and their related companies to date.
The Revenue's trawl of medical consultants' tax affairs dates back to 2010, when officials became concerned about medical consultants setting up companies through which they routed their business. A report by the Comptroller and Auditor General published in September said that medical consultants were "being advised by their accountants" to set up companies as part of a "tax planning strategy".

According to the report, Revenue was concerned that "non-business expenditure" such as paying wages to underage family members, paying nannies and housekeepers were among the expense claims being made in some cases. It was concerned about personal motor expenses and travel costs.

It was also concerned about "deferred income", with the report saying that it was often found to be unjustified and in some cases the amounts were "often over-inflated".

The benefits of the company structure allowed the cheaper corporation tax rate of 12.5pc to apply to certain income routed through the company.

It was concerned also at the nature of the transactions between the consultant and the companies involved, and whether they reflected the commercial reality of the consultant's work.

Around 30 high-profile consultants were named as tax defaulters following audits, many more consultants are understood to have volunteered to settle their tax affairs in advance of an audit, avoiding disclosure of their names.
 
The key matter here is whether it is a specialist medical consultant or a GP Practice. GP Practices are bought and sold on a consistent basis and the goodwill does have a value. For a specialist medcial consultant it is different as these practices are not bought and sold - the cases quoted above relate to consultants transferring their practice to a company and the latter paying the former as cash becomes available in the company.
 
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