Can my client get full tax relief on goodwill amortisation in these circumstances

Can my client get full tax relief on goodwill...

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Client bought a business as a going concern from his father who then retired. The cost of the business included £30K for goodwill. I am unsure whether I can claim tax relief on the goodwill amortisation because the business was bought from his father. In addition, the purchase price of the business is being paid over a period of 4 years. As such does this deferred consideration affect my ability to claim full tax relief on the value of plant purchased (£20K) or am I permitted to claim this in full in the AIA?

Any advice would be much appreciated. Thank you 

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By User deleted
19th Sep 2009 16:04

Not enough info
Is the client a ltd co? If not, no amortisation of goodwill - end of story. If so, when did father's business commence?

As for AIA, you should check rules on acquisitions from connected parties.

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By davebrown123
21st Sep 2009 14:09

Not enough information

Client is a Limited Company but goodwill created before 31/03/2002 as fathers business started trading before then. 

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By oktax
21st Sep 2009 17:04

.

The father is a connected person.

The transaction would not fall ito the new regime for IFA's of FA2002, therefore the company would not be allowed a tax deduction, the goodwill will remain a capital item throughout, irrespective of how it is written off in the accounts.

In my opinion the AIA on PLant etc would not be jeopordised by the loan relationship as the company has taken delivery of the assets and is obliged to pay, however I am unsure that you can claim AIA if the seller is connected?  Perhaps someone can help you with this.

 

 

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