Goodwill- is tax relief applicable in this instant

[Robert101]

A Ltd acquired 100% of the share capital of B Ltd, after which the operation of B ltd was hived up into A Ltd and B Ltd ceased to trade. Both A Ltd and B Ltd were under common control with the same shareholder and director.
In the accounts of A Ltd we now have goodwill which will be amortised. Is tax relief applicable on the goodwill. I do recall that the rule changed a number of years ago ( around April 2004) after which tax relief was allowed on this or am I mistaken?

[collich]

The rules you are thinking about regard the introduction of the IFA regime in April 2002. If this is internally generated goodwill in B Ltd. An important question is when the trade started. If it started pre-2002, it will not be an asset subject to the IFA regime. The rules follow are thus:

Pre-2002 goodwill. It remains outside the IFA regime for A Ltd. The transfer takes place at no gain no loss and any subsequent disposal of the goodwill is a chargeable gain.

Post-2002 goodwill. It falls within the IFA regime, but because they are in a group the transfer is a tax neutral transfer. A Ltd is deemed to have always owned the goodwill. Therefore its base cost is nil and there is no relief. Any subsequent disposal of the goodwill is an IFA gain.

The bottom lime is there is no relief in A Ltd for the amortisation.

[bobtaxidriver]

Sorry about posting to an old thread but just seemed easiest as it sets out the scenario.

In this case, the goodwill is definitely all post 2002 as the original business was set up after that. I can take the point (I think) that the transfer of the goodwil from B to A was NGNL and so A inherits the nil base cost for tax purposes even though goodwill is shown in the accounts after the hive up. but, hear me out...

In this case, the goodwill that was hived up needs to be impaired. Changes in the economy but mainly in legislation applicable to this business mean that the goodwill is not worth what was paid for it anymore. So the company did pay cash to acquire the B Ltd shares (that it effectively turned into assets, liabilities and goodwill when it hived up) and its sitting on a loss.

So my question is, any ideas how tax relief can be claimed for that loss? If not through the intangibles regime is there another way?

Just seems odd if it's the case that the value of what A Ltd acquired (for cash that was taxed in the hands of the owner of B Ltd) has gone down but it can't get any relief for it. Is it like that or am I missing something dead obvious?

Any thoughts appreciated.