Amortisation of goodwill

Claim amortisation of goodwill for corporation tax

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If a Ltd company with purchased goodwill prior to July 2015, which had previously not claimed amortisation, i.e retained the level of goodwill on the balance sheet believing it had not reduced in value, now for reasons that have affected the possibility of realising this goodwill in the future, wishes to claim amortisation of the goodwill for corporation tax purposes, is this possible. The original lease of the business was for 20 years, now with ten years remaining, could the business claim straight line amortisation over the remaining 10years believing the residual value will be nil.

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By User deleted
04th Sep 2016 10:19

Assuming the goodwill was purchased from an unrelated party after 2002 and before 8 July 2015, would comment as follows:

1. Change accounting policy to apply FRS 102 to the entity's accounts

2. The new s.816A CTA/09 doesn't apply to goodwill purchased before 8 July 2015

3. S.27.10 FRS 102 requires impairment review of an asset when there is an indication that the asset may be impaired. So get the impairment review done and recognise the loss. Then amortise the rest of it applying the GAAP.

4. Then apply s.872 CTA/09 tax relief.

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By bukkuz
05th Sep 2016 22:53

Thank you for your quick and informative response.
Extremely useful. Thank you.

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