Corporation tax relief on purchase of Goodwill

[Taxdodge]

I have a client who formed an LLP that purchased a business from an unrelated party in April 2007. The business had previously been owned and run by a sole trader for 19 years. In March 2008 our client realised she didn't actually want to have an LLP and instead formed a Ltd company which she then transferred the goodwill too.

Logic suggests that all the goodwill was created prior to her purchasing it from the LLP, i.e. in real terms she bought it from an unconnected party and it was simply transferred . However, technically the Ltd co. purchased the goodwill from a related party (the LLP).

Please let me know if you have come across a similar case or have a view on whether the company can claim corporation tax relief on the amortisation of the goodwill.

[pawncob]

Ask a Revenue accountant.(I don't know when you'll get an answer though)

http://www.hmrc.gov.uk/manuals/cirdmanual/cird30535.htm