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Amortization of goodwill - allowable?

A Ltd has been incorporated and trading since 2010

Prior to this Mr A ran the business as a sole trader for 3 years - from around 2007

Mr A had taken on the business from his father in law (Mr B) who  had run the business for 4 years - from around 2003.  I believe that Mr B had purchased the business from an unconnected party.

A Ltd has goodwill which is being amortized.

Am I right in thinking that no part of the goodwill arising on either of the transfer from Mr A to A Ltd or from Mr B to Mr A will be allowable for tax purposes?  The latter on the basis that Mr A acquired the business from a connected party.

Could however any part of the total goodwill that related to the purchase post April 2002 by Mr B from the unconnected third party be relievable?

Any thoughts very gratefully received.

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By BKD
14th Aug 2012 09:22

Amortization is not allowable

But amortisation is (I destest Americanisation - or should that be Americanization?)

If, as you believe to be the case, the goodwill was acquired from an unconnected party after April 2002, all of the amortisation should be allowable.

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I assume that the goodwill being written off in A Limited is that on the trasnfer of the business to the Ltd company.

 

Even if it is not connected, if it arose after April 2002 it is allowable.

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