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Goodwill: Sole trade to Partnership to Ltd Company


Please could someone point me in the right direction regarding my query...

In simple terms, my father commenced as a sole practioner some 20+ years ago after initially purchasing a small client base for lets say £1k which was classed as goodwill in his accounts.

Around 5 years ago, I joined forces with him, along with a fellow family member and we formed a new partnership. The assets of the sole trader, including the £1k goodwill were transferred into the partnership... the goodwill at this point would have had a value of, say £30k.

The client base has grown since 2007 and we have recently taken the decision to form a Ltd Co. The assets of the partnership wil be sold to the Ltd Co and these will include goodwill now valued at approx £80k.

Now, I am aware that goodwill created after Apr 2002 creates an allowable tax deduction equal to the amortisation charge - and my question is... could the "goodwill created wholly after Apr 2002" be classed as £50,000 (IE. £80,000 less £30,000) and a tax deduction claimed for the amortisation charge over the next however many years?

Or, am I on the wrong track?

Thank you for any help, relevant guidance.


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By woody12
31st Jul 2012 19:40

sole trader to partnership to lt company

good question

I would like to know answer to similar circumstance


I was sole rader from 1977 till 2007 . Formed a 3 man partnership. Changed banks etc, etc.

then in 2011 incorporated. Value at start oup in 1977 was 30k , value of goodwill in 2007 was 500k then sold goodwill . Can we claim any goodwill write off ? to ltd co for 1.8mil 

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