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Goodwill amortisation

Just had a look at a set of accounts for a similar sized practice to ours.  The intangible fixed assets have never been amortised.  Also the property has been revalued which is unusual but obviously strengthens the balance sheet. 

I was under the impression that goodwill had to be amortised over a maximum of 20 years.  Am I missing something here?

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By djn24
13th Apr 2012 11:27

By the way, the intangible fixed assets amount to approx £300k so can't be anything other than goodwill.

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13th Apr 2012 18:31

Who will care?

Not the right answer, but Companies House won't notice and HMRC won't care as long as the tax is correct (presumably it is pre 2002 goodwill so no tax relief due anyway).

The accountant does not want to write it off as it will reduce the divi he can declare, so not correct but who is going to put him straight?

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By djn24
17th Apr 2012 12:25

As you say companies house won't notice.

Surely the payment of dividends would be illegal and either be treated as dla or as salary?

As a side question-would you prepare accounts in this fashion for your clients?

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17th Apr 2012 11:07

HMRC

If the accounts are not compliant then perhaps HMRC have the option of discovery ??

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By BKD
17th Apr 2012 11:38

Discovery>

The Black Knight wrote:

If the accounts are not compliant then perhaps HMRC have the option of discovery ??


Discovery of what?
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17th Apr 2012 11:54

The starting figure on the tax return, profits in accordance with GAAP (before adjustments) is not correct ??

Following on from Smith v HMRC

Not seen one, just a thought door may be open ?

 

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17th Apr 2012 12:06

The loss of tax

May be as mentioned above ? an overdrawn loan account or worse caused by overpaying unlawful dividends ?

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17th Apr 2012 16:04

Professional Body

Might the accountant's professional body be interested that their member's company accounts don't comply with GAAP?

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17th Apr 2012 17:37

you might think so

Tim Robinson wrote:

Might the accountant's professional body be interested that their member's company accounts don't comply with GAAP?

But that's a No again!

In fact nearly all rules (criminal sanctions or not) seem to be voluntary !

 

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17th Apr 2012 16:57

In my experience

The only people that will express an iota of interest in this are the professional body of the firm preparing the accounts.

Companies House will not bother and I can't see HMRC complaining (or trying to understand what they are complaining about).

 

 

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By Briar
18th Apr 2012 09:06

Waht does the accounting policy say?

There should be an accounting policy disclosed. (Is the practice a limited company?)

As others have said, maybe it's pre 2002 goodwill so no tax relief due so no point in writing off the goodwill. Impairment review might show that goodwill has not reduced so why amortise it?

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By djn24
18th Apr 2012 09:36

It is a Ltd Co. 

It is a Ltd Co. 

 

Probably is before 2002 so I see that no tax relief is available.  I've never seen an accountancy practice not amortise goodwill on their balance sheet though?

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