Rules on related party goodwill & CAs

Related parties, Goodwill and Capital Allowances

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A brother has several cafes. He is currently a sole trader. He agrees to sell 1 cafe to his brother and sister-in-law. They decide to set up as a (close) company for the purchase.

The sale price is split between goodwill and moveable plant.

Just need to double check that:

A) under CTA 2009 s 835  that the brother counts as a related party (as an associate) such that the amortisation of the goodwill by the company will be disallowable by the company in the tax return.

B) There will be no AIAs available for the company. If the plant is sold at second hand market value (below original cost) then the CAs will be available on this value and written down at 18% (assuming general pool).

 

 

 

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