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Belated claim for tax releif on goodwill amortisation

Hi

New Ltd client with goodwill sat on the balance sheet generated on incorporation in 2006. I have just identified that although the goodwill was generated by a related party (previously a partnership) the partnership business did not start trading until after April 2002. Therefore the business could have claimed tax releif on amortisation.

However as this has not been done what are people's view on trying to now make a claim for rax releif:

1) claim from the first year of trading as Ltd adoptoing an appropriate amortisation period and make amendments to previous CT returns or,

2) claim tax releif going forward writing off over a suitable time scale? or,

3) Write off all goodwill in current year?

Thanks

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Has there been ...

... any amortisation (in the accounts) so far?

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No there had not been any amortisation in the accounts

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In which case

It's option 2 or 3.

Assuming that there is no economic justification for writing off the entire amount in one year, I'd go for a write-down over an appropriate period going forward.

The one issue that continues to trouble me is the requirement that accounts need to be GAAP-compliant and if they are not, then debits etc are computed as if the accounts were so compliant. The effect of that is presumably that it could be argued that the notional amortisation of earlier periods, that would have been required to ensure GAAP-compliance, is now out of time. No-one has been able to satisfactorily explain this point. What I would suggest doing is putting through a prior year adjustment to bring accounts up to date, that adjustment being deductible in the year that it is made.

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What would be the situation if goodwill was in the accounts?

I've just come across this post which just about answers a question I was about to post!

BUT what do you think the situation would be if amortisation had been put through the accounts, but not claimed? Would it be acceptable to claim for the previous two years plus current year in the current Corporation Tax return (with a note explaining)?

The amount of amortisation involved does not justify the expense of trying to get the extra 1% of corporation tax relief from the change of rates, and then no doubt time spent chasing up HMRC to get someone to action the amended previous year returns.

Thanks.

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