As far as I am aware, the initial amount payable on grant of a franchise is no longer allowable, under the intangibles regime.
I just wanted to confirm that my understanding is correct :
1. A new franchisee paying 30K under a 10 year franchise agreement PRE 8 July 2015 would be permitted to claim a deduction equal to the amount amortised in accordance with GAAP.
2. A franchisee paying 30K under a 10 year franchise agreement POST 8 July 2015 would get no deduction at all
I know how the intangibles regime works and how it changed in 2002 and 8 July 2015 (and many times in between) but cannot find any legislation that states that franchise fees are included in these rules - all I can find are references to "goodwill and certain other intangible assets".
I cannot rest until I know for sure that I am correct in 1 and 2 above.
(background is that I have a client who purchased a franchise just before 8 July 2015 and then purchased another area after 8 July 2015).
Something just doesn't feel right, but I suspect that means it is right!
Thanks guys
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Would this help?
"816A Restrictions on goodwill and certain other assets
(1) This section applies if a company acquires or creates a relevant asset.
(2) “Relevant asset” means—
(a) goodwill,
(b) an intangible fixed asset that consists of information which relates to customers or potential customers of a business,
(c) an intangible fixed asset that consists of a relationship (whether contractual or not) between a person carrying on a business and one or more customers of that business,
(d) an unregistered trade mark or other sign used in the course of a business, or
(e) a licence or other right in respect of an asset within any of paragraphs (a) to (d)."