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Where Taxpayers and Advisers Meet

Enhanced goodwill on incorporation

dalesider
Posts:23
Joined:Wed Aug 06, 2008 3:31 pm

Postby dalesider » Thu Sep 28, 2006 12:08 am

Sole trader purchased goodwill from unconnected party in 1997 for £50,000.

Business is to be incorporated and goodwill now valued at £100k

Is corporation tax relief available on the amortisation of

(a) the full 100k including the "internally generated)

(b) the £50k

(c) neither

Any help or pointers would be appreciated

hashman
Posts:1277
Joined:Wed Aug 06, 2008 3:31 pm

Postby hashman » Thu Sep 28, 2006 12:27 am

Neither - i.e. it is not available because although you can argue that some of the goodwill has been created since 1 April 2002 para 127B Sch 29 FA 2002 (as amended by s. 77(8) FA 2006) now stops this (as from 5 December 2005).

dalesider
Posts:23
Joined:Wed Aug 06, 2008 3:31 pm

Postby dalesider » Thu Sep 28, 2006 1:34 am

Apologies - have just ascertained that the company was incorporated in December 2004 but has not yet filed accounts. Assets and goodwill were transferred at that date so presumably any goodwill "enhanced" between 4/02 and 12/04 would be eligible for relief?

Business profitability increased dramatically in that period so large part of the £50k could be attributed.

hashman
Posts:1277
Joined:Wed Aug 06, 2008 3:31 pm

Postby hashman » Thu Sep 28, 2006 4:53 am

I believe that is strictly the case - but how you identify the amount of goodwill eligible for relief in the company is a different matter.

[A colleage of mine is currently querying whether the 2006 legislation does what I have suggested above it does - with 'Taxation' queries and HMRC]

hashman
Posts:1277
Joined:Wed Aug 06, 2008 3:31 pm

Postby hashman » Thu Sep 28, 2006 9:55 am

My colleague has had a couple of replies printed in this week's 'Taxation' - have a look at "Goodwill not good?" - the replies agree that relief should continue to be available for post 31/03/02 goodwill.


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